Search Results
Working Paper
Health, Health Insurance, and Retirement: A Survey
The degree to which retirement decisions are driven by health is a key concern for both academics and policymakers. In this paper we survey the economic literature on the health-retirement link in developed countries. We describe the mechanisms through which health affects labor supply and discuss how they interact with public pensions and public health insurance. The historical evidence suggests that health is not the primary source of variation in retirement across countries and over time. Furthermore, declining health with age can only explain a small share of the decline in employment ...
Working Paper
Wealth Concentration in the United States Using an Expanded Measure of Net Worth
Defined benefit (DB) pensions and Social Security are two important resources for financing retirement in the United States. However, these illiquid, non-market forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This paper develops an alternative, expanded wealth concept, augmenting precise net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security ...
Working Paper
Wealth Distribution and Retirement Preparation among Early Savers
This paper develops a new combined-wealth measure by augmenting data on net worth from the Survey of Consumer Finances with estimates of defined benefit (DB) pension and expected Social Security wealth. We use this concept to explore retirement preparation among two groups of households in pre-retirement years (aged 40 through 49 and 50 through 59), and to explore the concentration of wealth. We find evidence of moderate, but rising, shortfalls in retirement preparation. We also show that including DB pension and Social Security wealth results in markedly lower measures of wealth ...
Decomposing an Economic Impact into Its Local and Spillover Effects
An analysis of cost-of-living increases for Social Security shows a strong direct effect on income within a state where the recipient lives but little evidence of a spillover effect in other states.
Briefing
Can We Tax Social Security Benefits More Efficiently?
Many seniors pay taxes on their Social Security benefits due to a provision in the program's 1983 reform, under which the portion of benefits that's taxable rises with total income. This tax structure can impose high marginal rates on seniors even if their other income sources are modest. These high marginal rates, in turn, can determine whether beneficiaries decide to keep working or retire. Research suggests that several policy alternatives are more likely to keep seniors in the workforce and to generate more revenue for the Social Security Trust Fund.
Working Paper
The Effects of Collecting Income Taxes on Social Security Benefits
Since 1983, Social Security benefits have been subject to income taxation, a provision that can significantly increase the marginal income tax rate for older individuals. To assess the impact of this tax, we construct and calibrate a detailed life-cycle model of labor supply, saving, and Social Security claiming. We find that in a long-run stationary environment, replacing the taxation of Social Security benefits with a revenue-equivalent increase in the payroll tax would significantly increase labor supply, consumption and welfare. From an ex-ante perspective an even more desirable reform ...
Working Paper
Old, sick, alone, and poor: a welfare analysis of old-age social insurance programs
Poor health, large acute and long-term care medical expenses, and spousal death are significant drivers of impoverishment among retirees. We document these facts and build a rich, overlapping generations model that reproduces them. We use the model to assess the incentive and welfare effects of Social Security and means-tested social insurance programs such as Medicaid and food stamp programs, for the aged. We find that U.S. means-tested social insurance programs for retirees provide significant welfare benefits for all newborn. Moreover, when means-tested social insurance benefits are of the ...
Report
An Aggregate Model for Policy Analysis with Demographic Change
Many countries are facing challenging fiscal financing issues as their populations age and the number of workers per retiree falls. Policymakers need transparent and robust analyses of alternative policies to deal with demographic changes. In this paper, we propose a simple framework that can easily be matched to aggregate data from the national accounts. We demonstrate the usefulness of our framework by comparing quantitative results for our aggregate model with those of a related model that includes within-age-cohort heterogeneity through productivity differences. When we assess proposals ...
Journal Article
Rising disability rolls: causes, effects, and possible cures
Social Security disability insurance began in 1956 as a means of insuring a portion of the earned income of U.S. workers over age 50 against the risk of disability. In 1960, when coverage was extended to all workers, less than half a million workers were collecting benefits, and by 2012 this number had increased to 8.8 million people ? an increase from 0.3 percent to 3.6 percent of the population. Over this period, there have been a number of changes: Initially, the law insured only against permanent disabilities, but in 1965 the definition of disability was expanded to cover impairments ...
Working Paper
A Historical Welfare Analysis of Social Security: Whom Did the Program Benefit?
A well-established result in the literature is that Social Security tends to reduce steady state welfare in a standard life cycle model. However, less is known about the historical effects of the program on agents who were alive when the program was adopted. In a computational life cycle model that simulates the Great Depression and the enactment of Social Security, this paper quantifies the welfare effects of the program's enactment on the cohorts of agents who experienced it. In contrast to the standard steady state results, we find that the adoption of the original Social Security tended ...