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Social Insurance and Wealth Distribution

  • Minchung Hsu


    (National Graduate Institute for Policy Studies (GRIPS))

This paper aims to determine whether and, if so, how the existence of a means-tested, asset-based social insurance program and the potential reform thereof impacts wealth distribution in the United States. A dynamic equilibrium model that could generate several features of the current state of wealth distribution in the United States was developed to investigate to the extent to which social insurance programs affect wealth distribution in the United States. The results of several experiments and robustness tests performed using this model suggest that entirely eliminating the U.S. social insurance system would decrease the Gini coefficient from its current value of approximately 0.8 to less than 0.6. However, the results also indicate that reforming the social insurance system, whether by expanding or contracting it by 20%, would have no significant impact on wealth distribution.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 31 (2011)
Issue (Month): 1 ()
Pages: 687-698

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Handle: RePEc:ebl:ecbull:eb-10-00547
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  1. Luisa Fuster & Ayse Imrohoroglu & Selahattin Imrohoroglu, 2004. "Elimination of Social Security in a Dynastic Framework," Macroeconomics 0402008, EconWPA.
  2. Gary D. Hansen & Ayse Imrohoroglu, 1990. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," UCLA Economics Working Papers 583, UCLA Department of Economics.
  3. Cagetti, Marco & De Nardi, Mariacristina, 2008. "Wealth Inequality: Data And Models," Macroeconomic Dynamics, Cambridge University Press, vol. 12(S2), pages 285-313, September.
  4. Karsten Jeske & Sagiri Kitao, 2007. "U.S. tax policy and health insurance demand: can a regressive policy improve welfare?," FRB Atlanta Working Paper 2007-13, Federal Reserve Bank of Atlanta.
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