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The Effects of Differential Income Replacement and Mortality on U.S. Social Security Redistribution

Author

Listed:
  • Li Tan

    () (Department of Economics at the University of Missouri)

  • Cory Koedel

    () (Department of Economics and Truman School of Public Affairs, at the University of Missouri)

Abstract

We study redistribution via the United States Social Security retirement system for cohorts of men born during the second half of the 20th century. Our focus is on redistribution across race and education groups. The cohorts we study are younger than cohorts studied in previous, similar research and thus more exposed to recent increases in earnings inequality. All else equal, this should increase the degree of progressivity of Social Security redistribution due to the structure of the benefit formula. However, we find that redistribution is only modestly progressive for individuals born as late as 1980. Differential mortality rates across race and education groups are the primary explanation. While black-white mortality gaps have narrowed some in recent years, they remain large and dull progressivity. Mortality gaps by education level are also large and unlike the gaps by race, they are widening, which puts additional regressive pressure on Social Security redistribution.

Suggested Citation

  • Li Tan & Cory Koedel, 2017. "The Effects of Differential Income Replacement and Mortality on U.S. Social Security Redistribution," Working Papers 2017-01, Department of Economics, University of Missouri, revised Jun 2019.
  • Handle: RePEc:umc:wpaper:1701
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    File URL: https://economics.missouri.edu/sites/default/files/wp-files/tk_wp_062019_revised2.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.

    More about this item

    Keywords

    Earnings forecast; Bayesian forecasting; Social Security; Social Security progressivity; Social Security projections;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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