scholarly journals Social Security and Inequality over the Life Cycle

10.3386/w7570 ◽  
2000 ◽  
Author(s):  
Angus Deaton ◽  
Pierre-Olivier Gourinchas ◽  
Christina Paxson
Keyword(s):  
Life Cycle ◽  
Social Security

scholarly journals A historical welfare analysis of Social Security: Whom did the program benefit?

10.3982/qe657 ◽  
2019 ◽  
Vol 10 (4) ◽  
pp. 1357-1399 ◽  
Author(s):  
William B. Peterman ◽  
Kamila Sommer
Keyword(s):  
Life Cycle ◽  
Steady State ◽  
Social Security ◽  
Welfare Effects ◽  
Welfare Effect ◽  
Life Cycle Model ◽  
Cycle Model ◽  
The Great Depression ◽  
Standard Life ◽  
Program Benefit

A well‐established result in the literature is that Social Security reduces steady state welfare in a standard life cycle model. However, less is known about the historical quantitative 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 generally improved these cohorts' welfare, in part because these cohorts received far more benefits relative to their contributions than they would have received if they lived their entire life in the steady state with Social Security. Moreover, the negative general equilibrium welfare effect of Social Security associated with capital crowd‐out was reduced during the transition, because it took many periods for agents to adjust their savings levels in response to the program's adoption. The positive welfare effect experienced by these transitional agents offers one explanation for why the program that may reduce welfare in the steady state was originally adopted.

scholarly journals The Presidents Social Security Plan: How much would you pay to participate?

2011 ◽  
Vol 4 (4) ◽  
Author(s):  
Frank Caliendo ◽  
Allen B. Atkins
Keyword(s):  
Life Cycle ◽  
Social Security ◽  
Life Cycle Model ◽  
Present Value ◽  
Cycle Model ◽  
Rates Of Return ◽  
Social Security Program ◽  
Retirement Accounts ◽  
Long Time ◽  
President Bush

President Bush is in favor of using private retirement accounts to partially replace the current pay-as-you-go social security program.  We use a simple life-cycle model to analyze whether or not private accounts would benefit workers.  "Cash equivalents" are calculated under different assumptions to see how much a worker would be willing to pay to participate in the private account program.  In most circumstances, workers would benefit from the private account program.  Only when market rates of return are very low or a person expects to live for a very long time does the current pay-as-you-go system give a greater present value to a worker.

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