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Social Security and the Retirement and Savings Behavior of Low Income Households

  • Wilbert van der Klaauw

    ()

    (Department of Economics, University of North Carolina at Chapel Hill)

  • Kenneth I. Wolpin

    ()

    (Department of Economics, University of Pennsylvania)

In this paper, we develop and estimate a model of retirement and savings incorporating limited borrowing, stochastic wage offers, health status and survival, social security benefits, Medicare and employer provided health insurance coverage, and intentional bequests. The model is estimated on sample of relatively poor households from the first three waves of the Health and Retirement Study (HRS), for whom we would expect social security income to be of particular importance. The estimated model is used to simulate the responses to several counterfactual experiments corresponding to changes in social security rules. These include changes in benefit levels, in the payroll tax, in the social security earnings tax and in early and normal retirement ages.

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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 05-020.

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Length: 90 pages
Date of creation: 01 Mar 2005
Date of revision:
Handle: RePEc:pen:papers:05-020
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