IDEAS home Printed from
   My bibliography  Save this book chapter

The Distributional Impact of Social Security

In: Pensions, Labor, and Individual Choice


  • Michael D. Hurd
  • John B. Shoven


In the first part of the paper we report estimated transfers in the Social Security system for the Retirement History Survey sample.We define transfers to be the difference between the expected presentvalue of benefits less the present value of taxes paid in, where the latter is adjusted for the probability of living to reach retirement age.Unlike previous researchers we, therefore, account for the taxes paid by people who died before retirement, and it turns out this adjustment is important for some groups. The Retirement History Survey cohort will receive large transfers: roughly benefits will be about four times taxes,and the real internal rate of return will be about eight percent. We study how transfers vary by a comprehensive measure of wealth. People in the highest wealth quartile have the largest absolute transfers, and their internal rate of return is as high as that of any wealth quartile.In the second part of the paper we study transfers forsix synthetic cohorts, the heads of which are age 65 in the ten-year intervals 1970 through 2020. Within each cohort 12 families are defined according to earnings levels.We find that transfers are positive and large for the 1970 cohort, and that they decline steadily until they are negative for most groups in the 2020 cohort. Although high earners initially have the largest transfers in the 1970 cohort, they have the largest negative transfers in the 2020 cohort.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Michael D. Hurd & John B. Shoven, 1985. "The Distributional Impact of Social Security," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 193-222, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:7134

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. 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 401-421, December.
    2. 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.
    3. Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
    4. Richard V. Burkhauser & Jennifer L. Warlick, 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 401-421, December.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:7134. 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: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.