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Long-Run Effects of Social Security Reform Proposals on Lifetime Progressivity

In: The Distributional Aspects of Social Security and Social Security Reform

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  • Julia Lynn Coronado
  • Don Fullerton
  • Thomas Glass

Abstract

This paper uses a lifetime framework to address questions about the progressivity of social security and proposed reforms. We use a large sample of diverse individuals from the PSID to calculate lifetime income, to classify individuals into income quintiles, and then to calculate the present value of taxes minus benefits for each person in each group. In our basic calculations, the current system is slightly progressive, overall, on a lifetime basis. Social Security would become slightly more progressive in one of the reform plans, and it would become slightly regressive in each of the other plans. The pattern of progressivity is affected by alternative assumptions, but it is affected in similar ways for the current system and proposed reforms. None of these reforms greatly alters the current degree of progressivity on a lifetime basis.

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This chapter was published in:

  • Martin Feldstein & Jeffrey B. Liebman, 2002. "The Distributional Aspects of Social Security and Social Security Reform," NBER Books, National Bureau of Economic Research, Inc, number feld02-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 9751.

    Handle: RePEc:nbr:nberch:9751

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    References

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    1. Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc.
    2. Steven Caldwell & Melissa Favreault & Alla Gantman & Jagadeesh Gokhale & Thomas Johnson, 1998. "Social Security's Treatment of Postwar Americans," NBER Working Papers 6603, National Bureau of Economic Research, Inc.
    3. Nelissen, Jan H. M., 1998. "Annual versus lifetime income redistribution by social security," Journal of Public Economics, Elsevier, Elsevier, vol. 68(2), pages 223-249, May.
    4. Harriet Orcutt Duleep, 1986. "Measuring the Effect of Income on Adult Mortality Using Longitudinal Administrative Record Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(2), pages 238-251.
    5. Michael J. Boskin & Laurence J. Kotlikoff & Douglas J. Puffert & John B. Shoven, 1987. "Social Security: A Financial Appraisal Across and Within Generations," NBER Working Papers 1891, National Bureau of Economic Research, Inc.
    6. Jeffrey Brown, 2002. "Differential Mortality and the Value of Individual Account Retirement Annuities," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 401-446 National Bureau of Economic Research, Inc.
    7. Laurence J. Kotlikoff & Kent A. Smetters & Jan Walliser, 1998. "Social Security: Privatization and Progressivity," NBER Working Papers 6428, National Bureau of Economic Research, Inc.
    8. Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters, in: Privatizing Social Security, pages 215-264 National Bureau of Economic Research, Inc.
    9. Panis, C.W.A. & Lillard, L.A., 1996. "Socioeconomic Differentials in the Returns to Social Security," Papers, RAND - Labor and Population Program 96-05, RAND - Labor and Population Program.
    10. Julia Lynn Coronado & Don Fullerton & Thomas Glass, 2000. "The Progressivity of Social Security," NBER Working Papers 7520, National Bureau of Economic Research, Inc.
    11. Julia Lynn Coronado & Don Fullerton & Thomas Glass, 1999. "Distributional Impacts of Proposed Changes to the Social Security System," NBER Working Papers 6989, National Bureau of Economic Research, Inc.
    12. Jeffrey B Liebman, 2002. "Redistribution in the Current U.S. Social Security System," Working Papers 02-09, Center for Economic Studies, U.S. Census Bureau.
    13. Michael D. Hurd & John B. Shoven, 1985. "The Distributional Impact of Social Security," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 193-222 National Bureau of Economic Research, Inc.
    14. Burkhauser, Richard V & Warlick, Jennifer L, 1981. "Disentangling the Annuity from the Redistributive Aspects of Social Security in the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 27(4), pages 401-21, December.
    15. James E. Duggan & Robert Gillingham & John S. Greenlees, 1993. "Returns Paid To Early Social Security Cohorts," Contemporary Economic Policy, Western Economic Association International, vol. 11(4), pages 1-13, October.
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    Cited by:
    1. Sabine Jokisch & Laurence J. Kotlikoff, 2005. "Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax," NBER Working Papers 11858, National Bureau of Economic Research, Inc.
    2. Alan L. Gustman & Thomas L. Steinmeier, 2000. "How Effective is Redistribution Under the Social Security Benefit Formula?," NBER Working Papers 7597, National Bureau of Economic Research, Inc.
    3. McClellan, Mark & Skinner, Jonathan, 2006. "The incidence of Medicare," Journal of Public Economics, Elsevier, Elsevier, vol. 90(1-2), pages 257-276, January.
    4. Alan L. Gustman & Thomas L. Steinmeier, 2002. "The New Social Security Commission Personal Accounts: Where is the Investment Principal?," Working Papers, University of Michigan, Michigan Retirement Research Center wp031, University of Michigan, Michigan Retirement Research Center.
    5. Luís Eduardo Afonso & Reynaldo Fernandes, 2003. "Uma Estimativa dos Aspectos Distributivos da Previdência Social no Brasil," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Gr f15, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Lyon, Andrew B. & Stell, John L., 2000. "Analysis of Current Social Security Reform Proposals," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 473-514, September.
    7. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2001. "Finding a Way Out of America's Demographic Dilemma," NBER Working Papers 8258, National Bureau of Economic Research, Inc.

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