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Thomas L. Steinmeier - One of the best experts on this subject based on the ideXlab platform.

  • redistribution under the Social Security Benefit formula at the individual and household levels 1992 and 2004
    Journal of Pension Economics & Finance, 2013
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier, Nahid Tabatabai
    Abstract:

    Studies using data from the early 1990s suggested that while the progressive Social Security Benefit formula succeeded in redistributing Benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing Benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor Benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. It has been argued that with the increase in the labor force participation and earnings of women, Social Security now should do a better job of redistributing Benefits at the household level. To be sure, when we compare outcomes for a cohort with a household member age 51 to 56 in 1992 with those from a cohort born twelve years later, redistribution at the household level has increased over time. Nevertheless, as of 2004 there still is substantially less redistribution of Benefits from high to low earning households than from high to low earning individuals.

  • the effects of changes in women s labor market attachment on redistribution under the Social Security Benefit formula
    National Bureau of Economic Research, 2011
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier, Nahid Tabatabai
    Abstract:

    Studies using data from the early 1990s suggested that while the progressive Social Security Benefit formula succeeded in redistributing Benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing Benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor Benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. This paper compares outcomes for the earlier cohort with those of a cohort born twelve years later. With greater growth in women's earnings, the aim of the study is to see whether, after the recent growth in two earner households, and the growth in women's labor market activity and earnings, the Social Security system now fosters somewhat more redistribution from high to low earning households. We use data from the Health and Retirement Study to study a population consisting of members of households with at least one person age 51 to 56 in either 1992 or in 2004. We use four different measures of redistribution: the ratio of the present value of Benefits to taxes for households arrayed by decile of covered earnings; the fraction of total Social Security Benefits redistributed from households with high earnings to those with low earnings; the share of total Benefits paid to members of each cohort redistributed from households falling in the highest deciles of earners to those with lower covered earnings; and the rate of return to Social Security taxes for members with different amounts of covered earnings. Considering differences in earnings between cohorts, women enjoyed a more rapid growth of labor force participation, hours of work and covered earnings than men. This increased the redistribution of Social Security Benefits among households. Nevertheless, a considerable gap remains between the labor market activities and earnings of women versus men. As a result, the Social Security system remains much less successful in redistributing Benefits from households with high covered earnings to those with lower covered earnings than in redistributing Benefits from individuals with high covered earnings to those with lower covered earnings.

  • understanding patterns of Social Security Benefit receipt pensions incomes retirement and saving by race ethnicity gender and marital status a structural approach
    2004
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier
    Abstract:

    In this paper we use data from the Health and Retirement Study to examine differences in retirement behavior, wealth, Social Security and pension Benefits by race and gender. The differences observed among groups are sometimes substantial. We then estimate models jointly explaining retirement and wealth by race and gender. We decompose differences in outcomes into those due to differences in parameters of the preference function for leisure and goods, time preference rates, and those due to differences in the circumstances of the members of each group. By circumstances we mean both the opportunity set, and factors that determine the disutility of continued work, such as health status. We find that differences in outcomes among white, black and Hispanic males are not due to differences in preferences for leisure and goods consumption, but are due both to differences in time preference and to differences in circumstances. Differences in outcomes between men and women are primarily due to differences in preferences. Authors’ Acknowledgement This paper was supported by a grant from the U.S. Social Security Administration (SSA) to the Michigan Retirement Research Center, UM 03-13. The opinions and conclusions are solely those of the authors and should not be construed as representing the opinions or policy of SSA, the Michigan Retirement Research Center, or the National Bureau of Economic Research. Alan L. Gustman is Loren Berry Professor of Economics at Dartmouth College, Department of Economics, Hanover, N.H. 03755 (alan.l.gustman@dartmouth.edu). Thomas L. Steinmeier is Professor of Economics, Texas Tech University, Department of Economics, Lubbock, Texas 79409 (Thomas.Steinmeier@TTU.edu).

  • understanding patterns of Social Security Benefit receipt pensions incomes retirement and saving by race ethnicity gender and marital status a structural approach
    2004
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier
    Abstract:

    In this paper we use data from the Health and Retirement Study to examine differences in retirement behavior, wealth, Social Security and pension Benefits by race and gender. The differences observed among groups are sometimes substantial. We then estimate models jointly explaining retirement and wealth by race and gender. We decompose differences in outcomes into those due to differences in parameters of the preference function for leisure and goods, time preference rates, and those due to differences in the circumstances of the members of each group. By circumstances we mean both the opportunity set, and factors that determine the disutility of continued work, such as health status. We find that differences in outcomes among white, black and Hispanic males are not due to differences in preferences for leisure and goods consumption, but are due both to differences in time preference and to differences in circumstances. Differences in outcomes between men and women are primarily due to differences in preferences.

  • How Effective is Redistribution Under the Social Security Benefit Formula
    Journal of Public Economics, 2001
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier
    Abstract:

    This paper uses earnings histories from the Social Security Administration, linked to the survey responses for participants in the Health and Retirement Study, to investigate redistribution under the current Social Security Benefit formula. As advertised, own Benefits are significantly redistributed from individuals with high to those with low lifetime earnings. However, redistribution is roughly halved when spouse and survivor Benefits are taken into account and redistribution is measured among families. When families are arrayed by total earnings during years when both spouses are engaged in substantial work, there is very little redistribution from families with high to low earnings capacity.

Julie Topoleski - One of the best experts on this subject based on the ideXlab platform.

  • Uncertain policy for an uncertain world: The case of Social Security
    Journal of Policy Analysis and Management, 2007
    Co-Authors: John Sabelhaus, Julie Topoleski
    Abstract:

    Analysis and discussion of Social Security policy are usually based on expected fiscal and societal outcomes. However, future demographic and economic trends are uncertain, and thus ultimate outcomes for aggregate system financial flows and the distribution of taxes and Benefits across generations are uncertain. This paper analyzes a state-dependent approach to policy in which future Social Security Benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to which it is possible to systematically address uncertainty about system finances and distributional outcomes. © 2007 by the Association for Public Policy Analysis and Management

  • Uncertain Policy for an Uncertain World: The Case of Social Security: Working Paper 2006-05
    2006
    Co-Authors: John Sabelhaus, Julie Topoleski
    Abstract:

    Analysis and discussion of Social Security policy are usually based on expected fiscal and societal outcomes. However, future demographic and economic trends are uncertain, and thus ultimate outcomes for aggregate system financial flows and the distribution of taxes and Benefits across generations are uncertain. This paper analyzes a state-dependent approach to policy in which future Social Security Benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to which it is

David A. Wise - One of the best experts on this subject based on the ideXlab platform.

  • Social Security programs and retirement around the world disability insurance programs and retirement introduction and summary
    National Bureau of Economic Research, 2014
    Co-Authors: Courtney Coile, Kevin Milligan, David A. Wise
    Abstract:

    This is the introduction and summary to the sixth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between Social Security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs--reducing government Social Security Benefit payments and increasing government tax revenues. The fourth phase presented analyses of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. We found no evidence that increasing the employment of older persons will reduce the employment opportunities of youth and no evidence that increasing the employment of older persons will increase the unemployment of youth. The fifth phase on "Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms" was intended to set the stage for this current phase. This sixth phase of the ongoing ISS project is particularly related to the fifth phase (Wise, 2012) and the second phase (Gruber and Wise, 2004) of the project. This volume continues the focus of the previous volume on DI programs while extending the methodology to study retirement behavior used in the second phase to focus in particular on the effects of the DI programs. The key question this volume seeks to address is: given health status, to what extent are differences in labor force participation across countries determined by the provisions of disability insurance programs?

  • The Nexus of Social Security Benefits, Health, and Wealth at Death
    National Bureau of Economic Research, 2012
    Co-Authors: James M. Poterba, Steven F. Venti, David A. Wise
    Abstract:

    Social Security Benefits are the most important component of the income of a large fraction of older Americans. A significant fraction of persons approach the end of life with few financial assets and no home equity, relying almost entirely on Social Security Benefits for support. Whether persons reach late-life with positive non-annuity wealth depends importantly on health, which is quite persistent over the life-time. Persons in poor health in old age have a higher-than-average probability of having experienced low earnings while in the labor force, which puts them at greater risk of having low Social Security Benefits in retirement. While the progressivity of the Social Security Benefit formula provides a safety net to support low-wage workers in retirement, a noticeable fraction of persons, especially those in single-person households, still have income below the poverty level in their last years of life. Many of these individuals have few assets to draw on to supplement their income, and are in poor health. In general, low assets and low income in old age are strongly related to poor health. We explore this nexus and describe the relationship between Social Security Benefits and the exhaustion of non-annuity assets near the end of life. We examine the relationship between the drawdown of assets between the first year an individual is observed in the AHEAD data (1995) and the last year that individual is observed before death, and that individual's health, Social Security Benefits, and other annuity Benefits. We conclude that Social Security and defined Benefit pension Benefits are strongly "protective" of non-annuity assets, with a negative relationship between these income flows and the likelihood of exhausting non-annuity assets. We note that this result may in part reflect population heterogeneity in saving propensities. We also find that poor health is an important determinant of the drawdown of non-annuity wealth.

  • Social Security and retirement around the world historical trends in mortality and health employment and disability insurance participation and reforms
    2011
    Co-Authors: David A. Wise, Kevin Milligan
    Abstract:

    This is the introduction and summary to the fifth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement Incentives inherent in plan provisions and documented the strong relationship across countries between Social Security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs — reducing government Social Security Benefit payments and increasing government tax revenues. The fourth phase presented analyzes of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. We found no evidence that increasing the employment of older persons will reduce the employment opportunities of youth and no evidence that increasing the employment of older persons will increase the unemployment of youth. This phase is intended to set the stage for and inform future more formal analysis of disability insurance programs, with this key question: Given health status, to what extent are the differences in LFP across countries determined by the provisions of disability insurance programs? Here we first consider changes in mortality over time and in particular the relationship between mortality and labor force participation, thinking of mortality as one indicator of health that is comparable across countries and over time in the same country. We then consider how mortality is related to other indicators of health status, in particular self-assessed health and then how trends in DI participation are related to changes in health. Finally we consider the effect on disability insurance participation of “natural experiments” in which the disability insurance reforms were not prompted by changes in health status or by changes in the employment circumstances of older workers. We find that these “exogenous” reforms can have a very large effect on the labor force participation of older workers.

  • Social Security and retirement an international comparison
    The American Economic Review, 1998
    Co-Authors: Jonathan Gruber, David A. Wise
    Abstract:

    This article concerns the following items: 1) Decline in labour-force participation; 2) Social Security Benefit accrual and the implicit tax on work; 3) The importance of the early-retirement age; 4) The implicit tax on work and labour-force participation; etc.

Alan L. Gustman - One of the best experts on this subject based on the ideXlab platform.

  • redistribution under the Social Security Benefit formula at the individual and household levels 1992 and 2004
    Journal of Pension Economics & Finance, 2013
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier, Nahid Tabatabai
    Abstract:

    Studies using data from the early 1990s suggested that while the progressive Social Security Benefit formula succeeded in redistributing Benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing Benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor Benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. It has been argued that with the increase in the labor force participation and earnings of women, Social Security now should do a better job of redistributing Benefits at the household level. To be sure, when we compare outcomes for a cohort with a household member age 51 to 56 in 1992 with those from a cohort born twelve years later, redistribution at the household level has increased over time. Nevertheless, as of 2004 there still is substantially less redistribution of Benefits from high to low earning households than from high to low earning individuals.

  • the effects of changes in women s labor market attachment on redistribution under the Social Security Benefit formula
    National Bureau of Economic Research, 2011
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier, Nahid Tabatabai
    Abstract:

    Studies using data from the early 1990s suggested that while the progressive Social Security Benefit formula succeeded in redistributing Benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing Benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor Benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. This paper compares outcomes for the earlier cohort with those of a cohort born twelve years later. With greater growth in women's earnings, the aim of the study is to see whether, after the recent growth in two earner households, and the growth in women's labor market activity and earnings, the Social Security system now fosters somewhat more redistribution from high to low earning households. We use data from the Health and Retirement Study to study a population consisting of members of households with at least one person age 51 to 56 in either 1992 or in 2004. We use four different measures of redistribution: the ratio of the present value of Benefits to taxes for households arrayed by decile of covered earnings; the fraction of total Social Security Benefits redistributed from households with high earnings to those with low earnings; the share of total Benefits paid to members of each cohort redistributed from households falling in the highest deciles of earners to those with lower covered earnings; and the rate of return to Social Security taxes for members with different amounts of covered earnings. Considering differences in earnings between cohorts, women enjoyed a more rapid growth of labor force participation, hours of work and covered earnings than men. This increased the redistribution of Social Security Benefits among households. Nevertheless, a considerable gap remains between the labor market activities and earnings of women versus men. As a result, the Social Security system remains much less successful in redistributing Benefits from households with high covered earnings to those with lower covered earnings than in redistributing Benefits from individuals with high covered earnings to those with lower covered earnings.

  • understanding patterns of Social Security Benefit receipt pensions incomes retirement and saving by race ethnicity gender and marital status a structural approach
    2004
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier
    Abstract:

    In this paper we use data from the Health and Retirement Study to examine differences in retirement behavior, wealth, Social Security and pension Benefits by race and gender. The differences observed among groups are sometimes substantial. We then estimate models jointly explaining retirement and wealth by race and gender. We decompose differences in outcomes into those due to differences in parameters of the preference function for leisure and goods, time preference rates, and those due to differences in the circumstances of the members of each group. By circumstances we mean both the opportunity set, and factors that determine the disutility of continued work, such as health status. We find that differences in outcomes among white, black and Hispanic males are not due to differences in preferences for leisure and goods consumption, but are due both to differences in time preference and to differences in circumstances. Differences in outcomes between men and women are primarily due to differences in preferences. Authors’ Acknowledgement This paper was supported by a grant from the U.S. Social Security Administration (SSA) to the Michigan Retirement Research Center, UM 03-13. The opinions and conclusions are solely those of the authors and should not be construed as representing the opinions or policy of SSA, the Michigan Retirement Research Center, or the National Bureau of Economic Research. Alan L. Gustman is Loren Berry Professor of Economics at Dartmouth College, Department of Economics, Hanover, N.H. 03755 (alan.l.gustman@dartmouth.edu). Thomas L. Steinmeier is Professor of Economics, Texas Tech University, Department of Economics, Lubbock, Texas 79409 (Thomas.Steinmeier@TTU.edu).

  • understanding patterns of Social Security Benefit receipt pensions incomes retirement and saving by race ethnicity gender and marital status a structural approach
    2004
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier
    Abstract:

    In this paper we use data from the Health and Retirement Study to examine differences in retirement behavior, wealth, Social Security and pension Benefits by race and gender. The differences observed among groups are sometimes substantial. We then estimate models jointly explaining retirement and wealth by race and gender. We decompose differences in outcomes into those due to differences in parameters of the preference function for leisure and goods, time preference rates, and those due to differences in the circumstances of the members of each group. By circumstances we mean both the opportunity set, and factors that determine the disutility of continued work, such as health status. We find that differences in outcomes among white, black and Hispanic males are not due to differences in preferences for leisure and goods consumption, but are due both to differences in time preference and to differences in circumstances. Differences in outcomes between men and women are primarily due to differences in preferences.

  • How Effective is Redistribution Under the Social Security Benefit Formula
    Journal of Public Economics, 2001
    Co-Authors: Alan L. Gustman, Thomas L. Steinmeier
    Abstract:

    This paper uses earnings histories from the Social Security Administration, linked to the survey responses for participants in the Health and Retirement Study, to investigate redistribution under the current Social Security Benefit formula. As advertised, own Benefits are significantly redistributed from individuals with high to those with low lifetime earnings. However, redistribution is roughly halved when spouse and survivor Benefits are taken into account and redistribution is measured among families. When families are arrayed by total earnings during years when both spouses are engaged in substantial work, there is very little redistribution from families with high to low earnings capacity.

John Sabelhaus - One of the best experts on this subject based on the ideXlab platform.

  • Uncertain policy for an uncertain world: The case of Social Security
    Journal of Policy Analysis and Management, 2007
    Co-Authors: John Sabelhaus, Julie Topoleski
    Abstract:

    Analysis and discussion of Social Security policy are usually based on expected fiscal and societal outcomes. However, future demographic and economic trends are uncertain, and thus ultimate outcomes for aggregate system financial flows and the distribution of taxes and Benefits across generations are uncertain. This paper analyzes a state-dependent approach to policy in which future Social Security Benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to which it is possible to systematically address uncertainty about system finances and distributional outcomes. © 2007 by the Association for Public Policy Analysis and Management

  • Uncertain Policy for an Uncertain World: The Case of Social Security: Working Paper 2006-05
    2006
    Co-Authors: John Sabelhaus, Julie Topoleski
    Abstract:

    Analysis and discussion of Social Security policy are usually based on expected fiscal and societal outcomes. However, future demographic and economic trends are uncertain, and thus ultimate outcomes for aggregate system financial flows and the distribution of taxes and Benefits across generations are uncertain. This paper analyzes a state-dependent approach to policy in which future Social Security Benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to which it is

  • Social Security Benefit uncertainty under individual accounts
    Contemporary Economic Policy, 2005
    Co-Authors: Amy Rehder Harris, John Sabelhaus, Michael Simpson
    Abstract:

    I. INTRODUCTION Various Social Security reform proposals put forth in recent years have included individual accounts. Two of the three reform options offered by the 1994-1996 Advisory Council on Social Security (1997) incorporated such accounts. One Advisory Council option included mandatory individual accounts requiring workers to contribute an additional 1.6% of payroll, invested in indexed bond or equity funds managed by the federal government. Another option included a two-tiered system with privately held Personal Security Accounts (PSAs) that would allow workers to contribute five percentage points of their payroll tax to their PSA where it could be invested in "financial instruments" (Advisory Council on Social Security, 1997, p.30). The Kolbe-Stenholm 21st Century Retirement Security Act (Kolbe and Stenholm, 2002) proposal for Social Security reform includes an Individual Security Account (ISA) to which workers would contribute 3 percent of the first $10,000 of income plus 2 percent above $10,000, investing the funds in stocks, bonds, or government debt. Most recently, the President's Commission to Strengthen Social Security (CSSS) presented three proposals that all included a version of voluntary individual investment accounts; details are discussed in Section II. These proposals often tout expected rates of return (based on historical experience) that would lead to higher overall retirement income for Old-Age Insurance (OAI) worker beneficiaries who participate in the individual accounts. For example, based on Social Security Administration (SSA) estimates, the CSSS report (2001) shows that prototypical workers are expected to be better off under a system with individual accounts, even in cases where the current-law Benefit is reduced in order to eliminate the projected funding gap in Social Security. However, reporting only expected Benefits under individual accounts using average historical rates of return ignores the risk associated with investing in private securities, as noted by Feldstein and Rangulova (2001). One approach to controlling for the increased risk in evaluations of individual account proposals is to use a lower (appropriately risk-adjusted) rate of return. An alternative approach, which is used here, is to first generate sequences of future returns for private securities using Monte Carlo simulation, then solve for Benefits under each sequence of future returns, and finally analyze the distribution of Benefit outcomes across simulations. The latter is preferable because it acknowledges the higher expected return from investing in private securities, but it also produces direct measures of the increased risk (e.g., the probability that Benefits are actually lower under the proposed alternative). (1) The investment risk considered in this article is modeled on the principle that underlies the most basic CSSS approach to individual accounts. Participants contribute a fixed fraction of their current-law payroll tax to the individual account and in return they promise to give up a fraction of their existing current-law scheduled Benefit at retirement. The amount by which the scheduled Benefit is reduced equals the tax diverted to the individual account, accrued forward at a designated "offset" rate, usually the government bond rate plus or minus a wedge. Therein lies the investment risk--participants are better off if and only if their accounts earn more than the designated offset rate. The results show that the expected Benefit gain is positive for a 2 percent individual account carve-out with a simple Benefit offset using the SSA assumptions for the expected rates of return on stocks and bonds, but the standard deviation of that gain is much larger than the gain itself. Although expected gains from individual accounts are uncertain, it is important to keep in mind that even without individual accounts, future current-law Benefits are uncertain because key determinants such as future real wage growth and inflation are uncertain. …