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Social Security and the Evolution of Elderly Poverty

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  • Gary V. Engelhardt
  • Jonathan Gruber

Abstract

We use data from the March 1968-2001 Current Population Surveys to document the evolution of elderly poverty over this time period, and to assess the causal role of the Social Security program in reducing poverty rates. We develop an instrumental variable approach that relies on the large increase in benefits for birth cohorts from 1885 through 1916, and the subsequent decline and flattening of real benefits growth due to the Social Securing 'notch', to estimate of Social Security on elderly poverty. Our findings suggest that over all elderly families the elasticity of poverty to benefits is roughly unitary. This suggests that reductions in Social Security benefits would significantly alter the poverty of the elderly.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10466.

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Date of creation: May 2004
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Publication status: published as Auerbach, Alan, David Card and John Quigley (eds.) Public Policy and the Income Distribution. New York: Russell Sage Foundation, 2006.
Handle: RePEc:nbr:nberwo:10466

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  1. Alan B. Krueger & Jorn-Steffen Pischke, 1991. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," NBER Working Papers 3699, National Bureau of Economic Research, Inc.
  2. Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc.
  3. Timothy M. Smeeding, 1986. "Nonmoney income and the elderly: The case of the tweeners," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 5(4), pages 707-724.
  4. Sawhill, Isabel V, 1988. "Poverty in the U.S.: Why Is It So Persistent?," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1073-119, September.
  5. Stephen E. Snyder & William N. Evans, 2002. "The Impact of Income on Mortality: Evidence from the Social Security Notch," NBER Working Papers 9197, National Bureau of Economic Research, Inc.
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Cited by:
  1. Milligan, Kevin, 2013. "Employer-provided pensions, incomes, and hardship in early transitions to retirement," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2013-24, Vancouver School of Economics, revised 29 Apr 2013.
  2. Melvin Stephens Jr., 2005. "The Impact of the 1972 Social Security Benefit Increase on Household Consumption," Working Papers, University of Michigan, Michigan Retirement Research Center wp095, University of Michigan, Michigan Retirement Research Center.
  3. John R. Moran & Kosali Ilayperuma Simon, 2004. "Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts," Center for Policy Research Working Papers, Center for Policy Research, Maxwell School, Syracuse University 66, Center for Policy Research, Maxwell School, Syracuse University.
  4. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2012. "Economic well-being and poverty among the elderly: An analysis based on a collective consumption model," European Economic Review, Elsevier, Elsevier, vol. 56(6), pages 985-1000.
  5. Jagadeesh Gokhale & Kent Smetters, 2005. "Measuring Social Security’s Financial Problems," Working Papers, University of Michigan, Michigan Retirement Research Center wp093, University of Michigan, Michigan Retirement Research Center.
  6. Kevin S. Milligan, 2012. "How is Economic Hardship Avoided by Those Retiring Before the Social Security Entitlement Age?," NBER Working Papers 18051, National Bureau of Economic Research, Inc.
  7. Bérangère Legendre, 2011. "La croissance du revenu des retraités en Europe peut-elle être considérée comme pro-pauvres ?," Post-Print hal-00951721, HAL.
  8. Kobsak Pootrakool & Anak Serichetpong, 2007. "Safeguarding out Nation's Nest Egg: Necessary Reforms to our Social Security System," Working Papers, Economic Research Department, Bank of Thailand 2007-05, Economic Research Department, Bank of Thailand.
  9. Brian S. Armour & M. Melinda Pitts, 2007. "Smoking: taxing health and Social Security," Economic Review, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Atlanta, issue Q 3, pages 27-41.
  10. Kai (Jackie) Zhao, 2011. "Social Security and the Rise in Health Spending: A Macroeconomic Analysis," 2011 Meeting Papers 1061, Society for Economic Dynamics.
  11. Agneta Stark & Nancy Folbre & Lois Shaw & Timothy Smeeding & Susanna Sandstrom & Lois Shaw & Sunhwa Lee & Kyunghee Chung, 2005. "Poverty And Income Maintenance In Old Age: A Cross-National View Of Low Income Older Women / Growing Old In The Us: Gender And Income Adequacy / Gender And Aging In South Korea," Feminist Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 11(2), pages 163-197.
  12. Clark, Gordon & El Mekkaoui de Freitas, Najat & Legendre, Bérangère, 2012. "Poverty Risk and Holding Behavior Among Retirees," Economics Papers from University Paris Dauphine 123456789/11143, Paris Dauphine University.
  13. Madonna Harrington Meyer & Douglas A. Wolf & Christine L. Himes, 2006. "How Will Declining Rates of Marriage Reshape Eligibility for Social Security?," Center for Policy Research Policy Briefs, Center for Policy Research, Maxwell School, Syracuse University 33, Center for Policy Research, Maxwell School, Syracuse University.
  14. Hilary W. Hoynes & Marianne E. Page & Ann Huff Stevens, 2006. "Poverty in America: Trends and Explanations," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 20(1), pages 47-68, Winter.
  15. Deanna Sharpe, 2008. "Economic Status of Older Asians in the United States," Journal of Family and Economic Issues, Springer, Springer, vol. 29(4), pages 570-583, December.

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