Distributional Impacts of Proposed Changes to the Social Security System
In: Tax Policy and the Economy, Volume 13
In this paper we assess the degree to which the current social security system redistributes income from rich to poor. We then estimate the impact of various proposed changes to social security on the overall redistributive effect of the system. Our analysis takes a steady state approach in which we assume participants work their entire lives and retire under a given system. Redistribution is measured on a lifetime basis using estimated earnings profiles for a sample of people taken from the PSID. We account for differential mortality, not only by gender and race, but also be lifetime income. Our results indicate that the current social security system redistributes less than is generally perceived, mainly because people with higher lifetime income live longer and therefore draw benefits longer. Remaining progressivity is reduced and even reversed by an increase in the assumed discount rate, since regressive taxes become more important relative to later progressive benefits. We find that many of the proposed changes to social security have surprising little effect on the redistribution inherent in the system.
(This abstract was borrowed from another version of this item.)
|This chapter was published in: ||This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number
10924.||Handle:|| RePEc:nbr:nberch:10924||Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
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.:
- repec:oup:restud:v:47:y:1980:i:1:p:47-74 is not listed on IDEAS
- Steven Caldwell & Melissa Favreault & Alla Gantman & Jagadeesh Gokhale & Thomas Johnson, 1998.
"Social Security's Treatment of Postwar Americans,"
NBER Working Papers
6603, National Bureau of Economic Research, Inc.
- Edward M. Gramlich, 1996.
"Different Approaches for Dealing with Social Security,"
Journal of Economic Perspectives,
American Economic Association, vol. 10(3), pages 55-66, Summer.
- Gramlich, Edward M, 1996. "Different Approaches for Dealing with Social Security," American Economic Review, American Economic Association, vol. 86(2), pages 358-62, May.
- Harriet Orcutt Duleep, 1986. "Measuring the Effect of Income on Adult Mortality Using Longitudinal Administrative Record Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(2), pages 238-251.
- Jagadeesh Gokhale & Laurence J. Kotlikoff, 1999.
"Social Security's treatment of postwar Americans: how bad can it get?,"
9912, Federal Reserve Bank of Cleveland.
- Jagadeesh Gokhale & Laurence J. Kotlikoff, 2002. "Social Security's Treatment of Postwar Americans. How Bad Can It Get?," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 207-262 National Bureau of Economic Research, Inc.
- Jagadeesh Gokhale & Laurence J. Kotlikoff, 1999. "Social Security's Treatment of Postwar Americans: How Bad Can It Get?," NBER Working Papers 7362, National Bureau of Economic Research, Inc.
- Julia Lynn Coronado & Don Fullerton & Thomas Glass, 2000.
"The Progressivity of Social Security,"
NBER Working Papers
7520, National Bureau of Economic Research, Inc.
- Michael J. Boskin & Laurence J. Kotlikoff & Douglas J. Puffert & John B. Shoven, 1986. "Social Security: A Financial Appraisal Across and Within Generations," NBER Working Papers 1891, National Bureau of Economic Research, Inc.
- Julie Lee & Mark McClellan & Jonathan Skinner, 1999.
"The Distributional Effects of Medicare,"
in: Tax Policy and the Economy, Volume 13, pages 85-108
National Bureau of Economic Research, Inc.
- Jorgenson, Dale W & Slesnick, Daniel T, 1987. "Aggregate Consumer Behavior and Household Equivalence Scales," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 219-32, April.
- Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
- Laurence J. Kotlikoff & Kent A. Smetters & Jan Walliser, 1998.
"Social Security: Privatization and Progressivity,"
NBER Working Papers
6428, National Bureau of Economic Research, Inc.
- Garrett, Daniel M, 1995. "The Effects of Differential Mortality Rates on the Progressivity of Social Security," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 457-75, July.
- Panis, C.W.A. & Lillard, L.A., 1996. "Socioeconomic Differentials in the Returns to Social Security," Papers 96-05, RAND - Labor and Population Program.
- Burkhauser, Richard V & Warlick, Jennifer L, 1981. "Disentangling the Annuity from the Redistributive Aspects of Social Security in the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 27(4), pages 401-21, December.
- James J. Heckman & Thomas E. Macurdy, 1980. "A Life Cycle Model of Female Labour Supply," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 47-74.
- Michael D. Hurd & John B. Shoven, 1983.
"The Distributional Impact of Social Security,"
NBER Working Papers
1155, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:10924. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.