Should Social Security Benefits Be Means Tested?
AbstractSocial-security retirement benefits distort the saving decisions of workers who are rational enough to save for their future. Since the implicit rate of return in an unfunded social-security program is less than the marginal product of capital, the resulting decline in saving causes a welfare loss. The present paper examines the conditions under which the welfare loss can be reduced by replacing the current universal social-security program with a means-tested program that pays benefits only to those individuals with little or no other retirement income or assets.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2770498.
Date of creation: 1987
Date of revision:
Publication status: Published in Journal of Political Economy
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