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Economic Effects of Social Security
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2010
Summary
The social security system affects people throughout most of their lives, at work and in retirement. The supposed effects of social security on saving, labor supply, and the distribution of income figure prominently in current debates about whether and how to change the system. Theorists have developed alternative analytical frameworks for studying social security, but all involve extreme assumptions introduced for the sake of analytical tractability. Each study seems to describe the behavior of some, but not all or even most people. The shortcomings of available data have created additional roadblocks. As a result, the effects of social security on saving and labor supply are difficult to measure, and how such a complex system influences behavior is not at all well understood.
Yet decisions on social security cannot be avoided. If analysts cannot agree, policymakers are likely to increase the weight they attach to perceptions of equity, adequacy of benefits, fairness of taxes, and similar qualitative considerations. Hence it is desirable for lay observers to understand the framework that analysts use and the reasons why there is so much uncertainty.
This book sheds light on social security issues by examining evidence from economic studies about how the system affects saving, labor supply, and income distribution. It shows that these studies provide little evidence to support or refute assertions that social security has reduced saving, but they do indicate that it has contributed to the trend toward early retirement. The author finds that the aged are now about as well off on the average as the general population and that social security has played a considerable role in bringing about this equality.
This volume is the sixteenth in the second series of Brookings Studies of Government Finance.
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Bibliographic data
Copyright year
2010
ISBN-Print
978-0-8157-0029-6
ISBN-Online
978-0-8157-0734-9
Publisher
Rowman & Littlefield, Lanham
Language
English
Pages
84
Product type
Book Titles
Table of contents
ChapterPages
Contents No access
The Social Security Program No access
Differences between Annuities and Social Security No access
Some Special Terms No access
The Plan of the Book No access
The Life-Cycle Model No access
The Multigeneration Model No access
The Short-Horizon Model No access
Summary No access
Saving and Labor Supply No access
Measures of Social Security Wealth No access
Time-Series Analysis No access
Household Cross-sectional Studies No access
International Cross-sectional Studies No access
Summary of Evidence on Saving No access
Fundamental Structure No access
Specific Aspects of Social Security No access
Summary of Evidence on Labor Supply No access
Alternative Frameworks No access
The Economic Status of the Aged No access
Effects of the Life-Cycle Distribution of Income No access
