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Social Security and the Evolution of Elderly Poverty

Author

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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. 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.
    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. 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.
    4. 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.
    5. 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.
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    Citations

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    Cited by:

    1. Xiaoyan Lei & John Strauss & Meng Tian & Yaohui Zhao, 2011. "Living Arrangements of the Elderly in China Evidence from CHARLS," Working Papers WR-866, RAND Corporation.
    2. Matthew Weinzierl, 2014. "Seesaws and Social Security Benefits Indexing," NBER Working Papers 20671, National Bureau of Economic Research, Inc.
    3. Zhao, Kai, 2014. "Social security and the rise in health spending," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 21-37.
    4. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2012. "Economic well-being and poverty among the elderly: An analysis based on a collective consumption model," European Economic Review, Elsevier, vol. 56(6), pages 985-1000.
    5. Matthew Weinzierl, 2014. "Seesaws and Social Security Benefits Indexing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 137-196.
    6. Milligan, Kevin, 2013. "Employer-provided pensions, incomes, and hardship in early transitions to retirement," CLSSRN working papers clsrn_admin-2013-24, Vancouver School of Economics, revised 29 Apr 2013.
    7. Bérangère Legendre, 2011. "La croissance du revenu des retraités en Europe peut-elle être considérée comme pro-pauvres ?," Post-Print hal-00951721, HAL.
    8. John R. Moran & Kosali Ilayperuma Simon, 2004. "Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts," Center for Policy Research Working Papers 66, Center for Policy Research, Maxwell School, Syracuse University.
    9. Kobsak Pootrakool & Anak Serichetpong, 2007. "Safeguarding out Nation's Nest Egg: Necessary Reforms to our Social Security System," Working Papers 2007-05, Monetary Policy Group, Bank of Thailand.
    10. Brian S. Armour & M. Melinda Pitts, 2007. "Smoking: taxing health and Social Security," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 27-41.
    11. Takashi Oshio & Emiko Usui & Satoshi Shimizutani, 2018. "Labor Force Participation of the Elderly in Japan," NBER Chapters,in: Social Security Programs and Retirement around the World: Working Longer National Bureau of Economic Research, Inc.
    12. Jagadeesh Gokhale & Kent Smetters, 2005. "Measuring Social Security’s Financial Problems," Working Papers wp093, University of Michigan, Michigan Retirement Research Center.
    13. Agneta Stark & Nancy Folbre & Lois Shaw & Timothy Smeeding & Susanna Sandstrom & Lois Shaw & Sunhwa Lee & Kyunghee Chung, 2005. "Poverty And Income Maintenance In Old Age: A Cross-National View Of Low Income Older Women / Growing Old In The Us: Gender And Income Adequacy / Gender And Aging In South Korea," Feminist Economics, Taylor & Francis Journals, vol. 11(2), pages 163-197.
    14. Milligan, Kevin, 2014. "How is economic hardship avoided by those retiring before the Social Security entitlement age?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(04), pages 420-438, October.
    15. Hilary W. Hoynes & Marianne E. Page & Ann Huff Stevens, 2006. "Poverty in America: Trends and Explanations," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 47-68, Winter.
    16. Matthew Weinzierl, 2014. "Seesaws and Social Security Benefits Indexing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 137-196.
    17. Madonna Harrington Meyer & Douglas A. Wolf & Christine L. Himes, 2006. "How Will Declining Rates of Marriage Reshape Eligibility for Social Security?," Center for Policy Research Policy Briefs 33, Center for Policy Research, Maxwell School, Syracuse University.
    18. Deanna Sharpe, 2008. "Economic Status of Older Asians in the United States," Journal of Family and Economic Issues, Springer, vol. 29(4), pages 570-583, December.
    19. Melvin Stephens Jr., 2005. "The Impact of the 1972 Social Security Benefit Increase on Household Consumption," Working Papers wp095, University of Michigan, Michigan Retirement Research Center.
    20. Susanna Sandström & Timothy Smeeding, 2005. "Poverty and Income Maintenance in Old Age: A Cross-National View of Low Income Older Women," LIS Working papers 398, LIS Cross-National Data Center in Luxembourg.
    21. repec:dau:papers:123456789/11143 is not listed on IDEAS
    22. Kai (Jackie) Zhao, 2011. "Social Security and the Rise in Health Spending: A Macroeconomic Analysis," 2011 Meeting Papers 1061, Society for Economic Dynamics.

    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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