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How Effective is Redistribution Under the Social Security Benefit Formula?

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Author Info
Alan L. Gustman (Dartmouth College and NBER)
Thomas L. Steinmeier (Texas Tech University)
Abstract

This paper uses earnings histories from the Social Security Administration, linked to the survey responses for participants in the Health and Retirement Study, to investigate redistribution under the current social security benefit formula. As advertised, own benefits are significantly redistributed from individuals with high to those with low lifetime earnings. However, redistribution is roughly halved when spouse and survivor benefits are taken into account and redistribution is measured among families. When families are arrayed by total earnings during years when both spouses are engaged in substantial work, there is very little redistribution from families with high to low earnings capacity.

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File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp005.pdf
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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp005.

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Length: 35 pages
Date of creation: Aug 2000
Date of revision:
Handle: RePEc:mrr:papers:wp005

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Jeffrey B. Liebman, 2001. "Redistribution in the Current U.S. Social Security System," NBER Working Papers 8625, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Martin Feldstein & Jeffrey Liebman, 2000. "The Distributional Effects of an Investment-Based Social Security System," NBER Working Papers 7492, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. 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. [Downloadable!] (restricted)
    Other versions:
  4. Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
    • Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier. [Downloadable!] (restricted)
  5. James P. Smith, 2004. "The Distribution of Family Earnings," Labor and Demography 0408010, EconWPA. [Downloadable!]
    Other versions:
  6. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  7. Alan L. Gustman & Olivia S. Mitchell & Andrew A. Samwick & Thomas L. Steinmeier, . "Pension and Social Security Wealth in the Health and Retirement Study," Pension Research Council Working Papers 97-3, Wharton School Pension Research Council, University of Pennsylvania.
    Other versions:
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jeffrey B. Liebman, 2001. "Redistribution in the Current U.S. Social Security System," NBER Working Papers 8625, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Peter Birch Sørensen & Martin Ino Hansen & A. Lans Bovenberg, 2006. "Savings Accounts and the Life-Cycle Approach to Social Insurance," EPRU Working Paper Series 06-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  3. Jeffrey Brown, 2002. "Redistribution And Insurance: Mandatory Annuitization With Mortality Heterogeneity," Working Papers, Center for Retirement Research at Boston College 2001-02, Center for Retirement Research. [Downloadable!]
    Other versions:
  4. A. Bovenberg & Martin Hansen & Peter Sørensen, 2008. "Individual savings accounts for social insurance: rationale and alternative designs," International Tax and Public Finance, Springer, vol. 15(1), pages 67-86, February. [Downloadable!] (restricted)
  5. Falilou Fall, 2004. "Pension reform, assets returns and wealth distribution," Cahiers de la Maison des Sciences Economiques v04033, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  6. Falilou Fall, 2007. "Pension Reforms, Assets Returns and Wealth Distribution," Annales d'Economie et de Statistique, ADRES, issue 85, pages 03, Janvier-M. [Downloadable!]
  7. Harry ter Rele, 2005. "Measuring lifetime redistribution in Dutch collective arrangements," CPB Documents 79, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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