Hostname: page-component-586b7cd67f-g8jcs Total loading time: 0 Render date: 2024-11-23T20:56:54.606Z Has data issue: false hasContentIssue false
  • English
  • Français

Redistribution under the Social Security benefit formula at the individual and household levels, 1992 and 2004*

Published online by Cambridge University Press:  09 July 2012

ALAN L. GUSTMAN ,
THOMAS L. STEINMEIER  and
NAHID TABATABAI
ALAN L. GUSTMAN
Affiliation:
Department of Economics, Dartmouth College and NBER, Hanover, NH 03755-3514, USA (e-mail: [email protected])
THOMAS L. STEINMEIER
Affiliation:
Department of Economics, Texas Tech University, Lubbock, TX 79409, USA
NAHID TABATABAI
Affiliation:
Department of Economics, Dartmouth College, Hanover, NH 03755-3514, USA
Get access Rights & Permissions [Opens in a new window]

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.

Keywords

D31H55J11J14J16J18J26J38Social Securityredistributionbenefitsspouse benefitssurvivor benefitsbenefit formulaHealth and Retirement Studywomen's earningsfamily
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 12 , Issue 1 , January 2013 , pp. 1 - 27
Copyright
Copyright © Cambridge University Press 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

This research was supported by a grant from the U.S. Social Security Administration (SSA) through the Michigan Retirement Research Center (MRRC) under grant number UM11-06. The findings and conclusions expressed are solely those of the authors and do not represent the views of SSA or the MRRC. David Olson of the Social Security Administration was extremely helpful to us in dealing with the ANYPIA program. We also thank Mike Hurd, Olivia Mitchell and participants at the MRRC workshop for their helpful comments.

References

Biggs, Andrew G., Sarney, Mark and Tamborini, Christoper R. (2009). A progressivity index for Social Security. Social Security Issue Paper No. 2009-1. January 2009.Google Scholar
Coe, Norma B., Karamcheva, Zhenya, Kopcke, Richard W. and Munnell, Alicia (2011). How does the personal income tax affect the progressivity of OASI benefits? Paper Presented at the Meeting of the Retirement Research Consortium, Washington, DC.Google Scholar
Coronado, Julia Lynn, Fullerton, Don and Glass, Thomas (2000). The progressivity of social security. NBER Working Paper 7520.Google Scholar
Goda, Gopi Shah, Shoven, John B. and Slavov, Sita Nataraj (2011). Differential mortality by income and social security progressivity. In Wise, David A. (ed), Explorations in the Economics of Aging. Chicago: University of Chicago Press for NBER, pp. 189–204.Google Scholar
Gustman, Alan L. and Steinmeier, Thomas L. (2001). How effective is redistribution under the social security benefit formula? Journal of Public Economics, 82(1): 1–28.Google Scholar
Gustman, Alan L., Steinmeier, Thomas L. and Tabatabai, Nahid (2012). The growth in social security benefits among the retirement age population from increases in the cap on covered earnings. Social Security Bulletin, 72(2): 49–62.Google Scholar
Harris, Amy Rehder and Sabelhaus, John (2005). How Does Differential Mortality Affect Social Security Finances and Progressivity? Washington, DC: Congressional Budget Office, Working Paper.Google Scholar
Hurd, Michael (2011). Comment on differential mortality by income and social security progressivity. In Wise, David A. (ed), Explorations in the Economics of Aging. Chicago: University of Chicago Press for NBER, pp. 205–208.Google Scholar
Iams, Howard M., Phillips, John W.R., Robinson, Kristen, Deang, Lionel and Sushi, Irena (2008). Cohort changes in the retirement resources of older women. Social Security Bulletin, 68(4): 1–13.Google ScholarPubMed
Liebman, Jeffrey B. (2002). Redistribution in the current U.S. social security system. In Feldstein, Martin and Liebman, Jeffrey B. (eds). The Distributional Aspects of Social Security and Social Security Reform. Chicago: University of Chicago Press, pp. 11–48.Google Scholar
Smith, Karen, Toder, Eric and Iams, Howard (2003). Lifetime distributional effects of Social Security retirement benefits. Social Security Bulletin, 65(1): 33–61.Google ScholarPubMed
Steuerle, C. Eugene and Bakija, Jon M. (1994). Retooling Social Security for the 21st Century: Right and Wrong Approaches to Reform. Washington, DC: Urban Institute.Google Scholar
Tamborini, Christopher R., Iams, Howard M. and Whitman, Kevin (2009). Marital history, race, and social security spouse and widow benefit eligibility in the United States. Research on Aging, 31(5): 577–605.Google Scholar
U.S. Social Security Administration (2010). The 2010 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds. Washington, DC: U.S. Social Security Administration.Google Scholar