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

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  • Wilbert van der Klaauw

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

  • Kenneth I. Wolpin

    () (Department of Economics, University of Pennsylvania)

Abstract

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.

Suggested Citation

  • Wilbert van der Klaauw & Kenneth I. Wolpin, 2005. "Social Security and the Retirement and Savings Behavior of Low Income Households," PIER Working Paper Archive 05-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:05-020
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    More about this item

    Keywords

    Social Security; Retirement; Savings;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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