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Long Run Effects of Social Security Reform Proposals on Lifetime Progressivity

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  • Julia Lynn Coronado
  • Don Fullerton
  • Thomas Glass

Abstract

This paper uses a lifetime framework to address questions about the progressivity of social security and proposed reforms. We use a large sample of diverse individuals from the PSID to calculate lifetime income, to classify individuals into income quintiles, and then to calculate the present value of taxes minus benefits for each person in each group. In our basic calculations, the current system is slightly progressive, overall, on a lifetime basis. Social Security would become slightly more progressive in one of the reform plans, and it would become slightly regressive in each of the other plans. The pattern of progressivity is affected by alternative assumptions, but it is affected in similar ways for the current system and proposed reforms. None of these reforms greatly alters the current degree of progressivity on a lifetime basis.

Suggested Citation

  • Julia Lynn Coronado & Don Fullerton & Thomas Glass, 2000. "Long Run Effects of Social Security Reform Proposals on Lifetime Progressivity," NBER Working Papers 7568, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:7568
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    Cited by:

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    2. Gustman, Alan L. & Steinmeier, Thomas L., 2001. "How effective is redistribution under the social security benefit formula?," Journal of Public Economics, Elsevier, vol. 82(1), pages 1-28, October.
    3. Eytan Sheshinski & Frank N. Caliendo, 2021. "Social Security and the increasing longevity gap," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 29-52, February.
    4. Alan J. Auerbach & Kerwin K. Charles & Courtney C. Coile & William Gale & Dana Goldman & Ronald Lee & Charles M. Lucas & Peter R. Orszag & Louise M. Sheiner & Bryan Tysinger & David N. Weil & Justin W, 2017. "How the Growing Gap in Life Expectancy May Affect Retirement Benefits and Reforms," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(3), pages 475-499, July.
    5. Afonso, Luís Eduardo & Fernandes, Reynaldo, 2005. "Uma Estimativa dos Aspectos Distributivos da Previdência Social no Brasil," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 59(3), July.
    6. Jokisch, Sabine & Kotlikoff, Laurence J., 2007. "Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(2), pages 225-252, June.
    7. Amy Rehder Harris & John Sabelhaus, 2005. "How Does Differential Mortality Affect Social Security Finances and Progressivity? Working Paper 2005-05," Working Papers 16493, Congressional Budget Office.
    8. Liqun Liu & Andrew J. Rettenmaier, 2003. "Social Security Outcomes by Racial and Education Groups," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 842-864, April.
    9. Laun, Tobias & Markussen, Simen & Vigtel, Trond Christian & Wallenius, Johanna, 2019. "Health, longevity and retirement reform," Journal of Economic Dynamics and Control, Elsevier, vol. 103(C), pages 123-157.
    10. McClellan, Mark & Skinner, Jonathan, 2006. "The incidence of Medicare," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 257-276, January.
    11. Bagchi, Shantanu, 2019. "Differential mortality and the progressivity of social security," Journal of Public Economics, Elsevier, vol. 177(C), pages 1-1.
    12. Laun, Tobias & Markussen, Simen & Vigtel, Trond Christian & Wallenius, Johanna, 2018. "Health, Longevity and Pension Reform," Working Paper Series 2018:9, Uppsala University, Department of Economics.
    13. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2001. "Finding a Way Out of America's Demographic Dilemma," NBER Working Papers 8258, National Bureau of Economic Research, Inc.
    14. Lyon, Andrew B. & Stell, John L., 2000. "Analysis of Current Social Security Reform Proposals," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 473-514, September.
    15. Díaz-Saavedra, Julián, 2023. "Heterogeneity in longevity, redistribution, and pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 604-639, October.
    16. Alan L. Gustman & Thomas L. Steinmeier, 2002. "The New Social Security Commission Personal Accounts: Where Is the Investment Principal?," NBER Working Papers 9045, National Bureau of Economic Research, Inc.
    17. Kotlikoff, Laurence J. & Smetters, Kent & Walliser, Jan, 2007. "Mitigating America's demographic dilemma by pre-funding social security," Journal of Monetary Economics, Elsevier, vol. 54(2), pages 247-266, March.
    18. Yuh, Yoonkyung & Yang, Jaehwan, 2011. "The Valuation and Redistribution Effect of the Korea National Pension," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 52(1), pages 113-142, June.

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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