Social Security Privatization: What It Can and Cannot Accomplish

AbstractSocial Security is widely known as “The Third Rail of American Politics” and the program has proved been remarkably stable and politically resilient, over time. While true, this basic story about the institutional stability of Social Security in the US should not hide the segmented, discontinuous nature of its politics over the last four decades. As suggested in this article, the changing nature of Social Security politics is reflected in the variety of the policy options debated, which range from incremental benefit cuts and revenue increases adopted during the Carter and the Reagan years to structural, path-shifting proposals associated with the idea of Social Security privatization, which only became a mainstream policy alternative during the Clinton years. The following analysis explores the debate about these diverse policy alternatives, if and when they entered the federal policy agenda during the periods under consideration.

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The Effects of Social Security Privatization on Household Saving: Evidence from the Chilean Experience

SSRN Electronic Journal ◽

10.2139/ssrn.84028 ◽

1998 ◽

Cited By ~ 3

Author(s):

Julia Lynn Coronado

Keyword(s):

Social Security ◽

Household Saving ◽

Social Security Privatization

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The Effects of Social Security Privatization on Household Saving: Evidence from Chile

Contributions in Economic Analysis & Policy ◽

10.2202/1538-0645.1033 ◽

2002 ◽

Vol 1 (1) ◽

Cited By ~ 3

Author(s):

Julia Lynn Coronado

Keyword(s):

Social Security ◽

Financial Stability ◽

Domestic Saving ◽

Social Security Systems ◽

Security Systems ◽

Household Saving ◽

Percentage Points ◽

Saving Rates ◽

Social Security Privatization ◽

The Impact

Abstract In recent years, a handful of countries have converted the financing of their social security systems from pay-as-you-go (PAYGO) to partial or full funding. Privatization is viewed as one way to insulate social security from the political and demographic pressures that currently threaten the financial stability of PAYGO systems. However, privatization would improve a nation's situation only if such a reform increases domestic saving. In this paper I use evidence from Chile, where social security was privatized in 1981, to assess the impact of such a reform on household saving rates. I find that the reform provided a significant stimulus for net of social security household saving; increasing household saving rates between 5 and 10 percentage points.

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