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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.

Suggested Citation

  • Gary V. Engelhardt & Jonathan Gruber, 2004. "Social Security and the Evolution of Elderly Poverty," NBER Working Papers 10466, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10466
    Note: AG PE
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    References listed on IDEAS

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    1. 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.
    2. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-437, October.
    3. 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 1073-1119, September.
    4. 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.
    5. Martin Feldstein, 1980. "Social Security, Induced Retirement, and Aggregate Capital Accumulation:A Correction and Updating," NBER Working Papers 0579, National Bureau of Economic Research, Inc.
    6. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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