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How Well Did Social Security Mitigate The Effects Of The Great Recession?

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  • William B. Peterman
  • Kamila Sommer

Abstract

Using a computational life cycle model, this article assesses how Social Security affects the welfare of different types of individuals during the Great Recession. Overall, we find that Social Security reduces the average welfare losses for agents alive at the time of the Great Recession by the equivalent of 1.4% of expected future lifetime consumption. Moreover, we show that although the program mitigates some of the welfare losses for most agents, it is particularly effective at mitigating the losses for agents who are poorer and/or older at the time of the shock.

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  • William B. Peterman & Kamila Sommer, 2019. "How Well Did Social Security Mitigate The Effects Of The Great Recession?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(3), pages 1433-1466, August.
  • Handle: RePEc:wly:iecrev:v:60:y:2019:i:3:p:1433-1466
    DOI: 10.1111/iere.12392
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    Cited by:

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    2. Joshua H. Gallin & Raven S. Molloy & Eric R. Nielsen & Paul A. Smith & Kamila Sommer, 2018. "Measuring Aggregate Housing Wealth : New Insights from an Automated Valuation Model," Finance and Economics Discussion Series 2018-064, Board of Governors of the Federal Reserve System (U.S.).
    3. Andrew Glover & Jonathan Heathcote & Dirk Krueger & José-Víctor Ríos-Rull, 2020. "Intergenerational Redistribution in the Great Recession," Journal of Political Economy, University of Chicago Press, vol. 128(10), pages 3730-3778.
    4. Gallin, Joshua & Molloy, Raven & Nielsen, Eric & Smith, Paul & Sommer, Kamila, 2021. "Measuring aggregate housing wealth: New insights from machine learning ☆," Journal of Housing Economics, Elsevier, vol. 51(C).
    5. Menno, Dominik & Oliviero, Tommaso, 2020. "Financial intermediation, house prices, and the welfare effects of the U.S. Great Recession," European Economic Review, Elsevier, vol. 129(C).
    6. William B. Peterman & Kamila Sommer, 2019. "A historical welfare analysis of Social Security: Whom did the program benefit?," Quantitative Economics, Econometric Society, vol. 10(4), pages 1357-1399, November.
    7. Wu, Weixing & Zhao, Jing, 2022. "Economic policy uncertainty and household consumption: Evidence from Chinese households," Journal of Asian Economics, Elsevier, vol. 79(C).
    8. Daniel Harenberg & Alexander Ludwig, 2019. "Idiosyncratic Risk, Aggregate Risk, And The Welfare Effects Of Social Security," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(2), pages 661-692, May.
    9. Sewon Hur, 2018. "The Lost Generation of the Great Recession," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 179-202, October.
    10. de Bresser, Jochem & Knoef, Marike & Kools, Lieke, 2021. "Cutting one’s coat according to one’s cloth – How did the great recession affect retirement resources and expenditure goals?," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 126-166.

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