New papers from the Social Science Research Network

"The Impact of Changes in Second Pension Pillars on Public Finances in Central and Eastern Europe"
CESifo Working Paper Series No. 3801

BALÁZS ÉGERT, Organization for Economic Co-Operation and Development (OECD), CESifo (Center for Economic Studies and Ifo Institute for Economic Research), University of Paris 10 Nanterre - Department of Economics, William Davidson Institute
Email: begert@u-paris10.fr

This paper studies the impact of recent changes in second pension pillars of three Central and Eastern European Countries on the deficit and implicit debt of their full pension systems. The paper seeks to answer the following questions: what is the impact on the sustainability of Poland’s pension system of the decrease in the pension contribution going to the second pension pillar from 7.3% to 2.3% in 2011; what are the implications of the recent changes on gross replacement rates; does the weakening of the Polish second pension system have a different impact on pension system sustainability than a similar move in a Hungarian-style pension system with a defined-benefit first pillar and how does Estonia’s temporary decrease in pension contributions compensated by temporarily higher future rates affect pension sustainability in that country. The simulation results show that in our baseline scenario the Polish move would permanently lower future pension-system debt, chiefly as a result of a cut in replacement rates. But using a combination of pessimistic assumptions including strong population ageing, low real wage growth and a high indexation of existing pension benefits, coupled with bringing in tax expenditures related to the third voluntary pension pillar and an increase in the share of minimum pensions leads to higher pension system deficits and eventually more public debt at a very long horizon. The simulations also suggest that the Hungarian pension reversal reduces deficit and debt only temporarily, mainly because of Hungary’s costly defined-benefit first pension pillar: the weakening of the second pillar is tantamount to swapping low current replacement rates (in the defined-contribution second pillar) against high future replacement rates in the defined-benefit first pension pillar. Finally, results show that the Estonian move will increase public debt only very moderately in the long run, even though this result is sensitive to the effective interest rate on public debt.

"How Does Social Security Claiming Respond to Incentives? Considering Husbands' and Wives' Benefits Separately"
FEDS Working Paper No. 2012-19

ALICE HENRIQUES, affiliation not provided to SSRN
Email: amh2144@columbia.edu

A majority of women receive most of their Social Security benefits based upon their husbands' earnings history, but previous research has shown that husbands' benefit claiming is inconsistent with maximizing lifetime benefits for the couple. However, that research assumes husbands choose their claim age based on all Social Security incentives facing the household. I show that husbands' claiming behavior responds to the actuarial incentives built into their own retired worker benefit formula, but not to the incentives built into the spouse and survivor formulas that determine their wives' benefits. This failure to incorporate his spouses' incentives reduces wives' lifetime benefits. Variation in incentives comes from rule changes to the Social Security benefit calculation in addition to the age difference between spouses and the relative strength of the wife's labor force history. A variety of robustness checks looking at segments of the population predicted to be more responsive to incentives provide similar results to the main specification.

"Political-Economy of Pension Plans: Impact of Institutions, Gender, and Culture"

RAJ AGGARWAL, University of Akron - Department of Finance
Email: aggarwa@uakron.edu
JOHN W. GOODELL, University of Akron - Department of Finance, College of Business Administration
Email: JohnGoo@uakron.edu

National pension systems are an important part of financial intermediation and worker welfare in most countries, but how and why do they differ internationally? Controlling for important political, economic and social institutions, we document that international differences in pension progressivity, or how pensions reflect lifetime earnings, are negatively related to masculinity, uncertainty avoidance, individualism, long-term orientation, employment rights, average pension levels, social trust and economic inequality. We also find that pension progressivity is positively related to the economic and societal role of women, the extent of Catholicism; as well as political voice and accountability. These results provide important insights for both public policy and MNC managers.

"The Sensitivity of Proposed Social Security Benefit Formula Changes to Lifetime Earnings Definitions"
Social Security Bulletin 72(2): 1-22

HILARY WALDRON, U.S. Social Security Administration
Email: hilary.waldron@ssa.gov

Several Social Security proposals have included benefit formula changes that apply to earners above a specified percentage of the combined male and female (unisex) lifetime earnings distribution. The unisex distribution is an average of two disparate groups with large lifetime differences in labor market participation. This study finds that if Social Security’s median unisex average indexed monthly earnings (AIME) amount is used to define an earnings threshold below which benefits will be held roughly unreduced, the percentage of fully insured men subject to benefit reductions (70 percent) exceeds the unisex estimate of the population subject to benefit reductions (50 percent) by 20 percentage points. If policymakers wish to adjust future benefits and focus benefit reductions on middle or high primary or full-time wage earners in a household, the male, rather than unisex, AIME would come closer to achieving such a goal.

"The Implications of Marital History Change on Women’s Eligibility for Social Security Wife and Widow Benefits, 1990–2009"
Social Security Bulletin 72(2): 23-38, 2012

HOWARD IAMS, U.S. Social Security Administration
Email: Howard.m.iams@ssa.gov
CHRISTOPHER R. TAMBORINI, U.S. Social Security Administration
Email: Chris.Tamborini@ssa.gov

Social Security retirement benefits in the United States (US) reflect marital histories and lifetime earnings of current and former married couples. Focusing on the link between marital history and benefit eligibility, this article examines women’s marital patterns over the past two decades. Using the 1990 and 2009 Marital History Modules to the Census Bureau’s Survey of Income and Program Participation, descriptive/regression analysis reveals substantial changes in women’s marital patterns among baby boomers and generation Xers. Those changes have prompted a decline in qualifying marital histories for Social Security spouse and widow benefits. The findings also reveal substantial variation by race/ethnicity. Black women are significantly more likely to be potentially ineligible for a marriage-based benefit than white women, particularly in more recent cohorts. Hispanic women’s marriage-based eligibility is between that of black and white women. US-born Hispanic women had higher shares without a qualifying marital history compared with the foreign born.

"The Growth in Social Security Benefits Among the Retirement-Age Population from Increases in the Cap on Covered Earnings"
Social Security Bulletin 72(2): 49-61, 2012

ALAN L. GUSTMAN, Dartmouth College - Department of Economics, National Bureau of Economic Research (NBER)
Email: Alan.L.Gustman@dartmouth.edu
THOMAS L. STEINMEIER, Texas Tech University - Department of Economics and Geography
Email: thomas.steinmeier@ttu.edu
NAHID TABATABAI, Dartmouth College - Department of Economics
Email: nahid.tabatabai@dartmouth.edu

Analysts have proposed raising the maximum level of earnings subject to the Social Security payroll tax (the “tax max”) to improve long-term Social Security Trust Fund solvency. This article investigates how raising the tax max leads to the “leakage” of portions of the additional revenue into higher benefit payments. Using Health and Retirement Study data matched to Social Security earnings records, we compare historical payroll tax payments and benefit amounts for Early Boomers (born 1948–1953) with tax and benefit simulations had they been subject to the tax max (adjusted for wage growth) faced by cohorts 12 and 24 years older. We find that 43.2 percent of the additional payroll tax revenue attributable to tax max increases affecting Early Boomers relative to taxes paid by the cohort 12 years older leaked into higher benefits. For Early Boomers relative to those 24 years older, we find 53.5 percent leakage.

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New working papers from the Michigan Retirement Research Center

MRRC Working Papers

Recently released Michigan Retirement Research Center Working Papers are now available for download. View their Abstracts and Key Findings below.

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Contents:

* Spousal Labor Supply Responses to Government Programs: Evidence from the Disability Insurance Program by Susan Chen

* Personality and Response to the Financial Crisis by Angela Lee Duckworth and David Weir

* Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants by David Autor, Nicole Maestas, Kathleen Mullen and Alexander Strand

* Earnings Growth versus Measures of Income and Education for Predicting Mortality by Harriet Duleep and David A. Jaeger

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Spousal Labor Supply Responses to Government Programs: Evidence from the Disability Insurance Program (WP 2010-261 ) by Susan Chen

Abstract:

Disability is a permanent unexpected shock to labor supply which according to the theory of the added worker effect should induce a large spousal labor supply response. The Disability Insurance (DI) program is designed to mitigate the income lost due to disability. To the extent that it does this, it can crowd out the spousal labor supply response predicted by the added worker effect theory. Using a unique data that matches administrative data combining worker’s earnings histories and disability insurance applications, this study finds that DI crowds out spousal labor force participation by 6 percent and the displacement spans multiple years. The estimated crowd-out effects are also larger for younger wife cohorts and cohorts with particular types of impairments such as musculoskeletal disease.

Key Findings:

* Husbands’ disability insurance receipt has a small crowd-out effect on their wives’ labor supply.

* Husbands’ Disability Insurance receipt crowds out wives’ labor force participation by an estimated 8 percent and earnings by $2,200 for up to 5 years after the disability determination decision.

* For a sample of wives whose husband are homogeneous in terms of the severity of their health conditon, the estimates of the crowd-out effects are larger, at 11 percent and $2,600 for labor force participation and earnings. * These estimates represent an upper bound on the potential labor supply response of the wives of beneficiaries had their husbands not received benefits.

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Personality and Response to the Financial Crisis (WP 2011-260) by Angela Lee Duckworth and David Weir

Abstract:

In a previous study, we found the family of personality traits known as conscientiousness to be associated in cross-sectional analyses with both lifetime earnings and wealth. In this study, we used data from an Internet survey of HRS respondents in the second quarter of 2009 to test whether conscientiousness and other Big Five factors prospectively predicted responses to the financial crisis of 2008/09. In addition, to improve the targeting and design of behavioral interventions for "at-risk" individuals, we examined two specific facets of conscientiousness (i.e., self-control and perseverance) that may be more highly related to these economic outcomes than other facets. Finally, we used data from the Consumption and Activities Mail Survey (CAMS) to examine whether personality is related to the proportion of income saved vs. spent.

Missing data precluded sufficiently powerful prospective analyses of personality and responses to the financial crisis. Likewise, data on self-control and perseverance from the 2010 experimental module were not sufficient at the time of final reporting to come to definitive conclusions about how these facets relate to economic outcomes. We did find that conscientious adults save more and spend less of their incomes, whereas adults who are higher in openness to experience (e.g., adventurous, sophisticated) save less and spend more of their income. The robust associations between conscientiousness and economic outcomes suggests further investigation of interventions that improve conscientiousness as well as policies that specifically target less conscientious individuals (e.g., default choices for retirement savings).

Key Findings:

* The study found no notable associations between personality and response to the financial crisis; however, the sample size was insufficient to reach definitive conclusions.

* More conscientious adults save more of their income.

* Adults who are impulsive in the domain of finance save less of their income.

View/Download Working Paper (PDF):

http://www.mrrc.isr.umich.edu/dl.cfm?pid=813&type=102

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Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants (WP 2011-258) by David Autor, Nicole Maestas, Kathleen Mullen and Alexander Strand

Abstract:

An influential body of research studies the labor supply and earnings of denied Social Security Disability Insurance (SSDI) applicants to estimate the potential employment and earnings of those awarded benefits. This research design implicitly treats employability as a stable applicant attribute that is not directly impacted by the process of applying for SSDI benefits. If, plausibly, applicants’ employment potential deteriorates while they are out of the labor force, then the labor force participation of denied applicants -- who spend an average of 10 months seeking benefits -- may understate their employment potential at the time of application. This paper tests whether the duration of SSDI applications causally affects applicants’ subsequent employment. We use a unique Social Security Administration workload database to identify exogenous variation in applicants’ initial decision times induced by differences in processing speed among the disability examiners to which they are randomly assigned. This variation significantly affects applicants’ total processing time but, importantly, is uncorrelated with their initial award and denial outcomes. We find that longer processing times reduce the employment and earnings of SSDI applicants in the years after their initial decision. A one standard deviation (2.4 month) increase in initial processing time reduces annual employment rates by 1 percentage point (3.2%) in years two, three and four post-decision. Extrapolating these effects to total applicant processing times, we estimate that the SSDI determination process directly reduces the post-application employment of denied applicants by approximately 3.6 percentage points (7%) and allowed applicants by approximately 5.2 percentage points (33%).

Key Findings:

* We find that longer processing times of disability applications reduce the employment and earnings of SSDI applicants in the years after their initial decision.

* We estimate that the SSDI determination process directly reduces the post-application employment of denied applicants by approximately 7% and allowed applicants by approximately 33%.

* The mean determination time for allowed applicants significantly exceeds that of denied applicants (14.1 versus 9.7 months) because half of beneficiaries are allowed only after a lengthy appeal.

View/Download Working Paper (PDF):

http://www.mrrc.isr.umich.edu/dl.cfm?pid=809&type=102

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PIMCO: What is driving the Social Security shortfall?

James Moore of the investment firm PIMCO discusses the latest Social Security Trustees Report. Some highlights:

• ​ Over the past five years the exhaustion date of the OASI trust has been brought forward by eight years.  We are heading in the wrong direction.
• What is causing the shortfall?  Setting aside the actuarial p’s and q’s, the core of the problem comes down to mortality, demographics and growth.
• The most likely solution will be lower indexation of wage growth for benefit determination, delayed retirement for those set to retire in 10 or more years and higher taxes for everyone.

Check out the whole article here.

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Obama’s “Julia” Garners Three Pinnochios on Social Security

The Washington Post’s Fact Checker column has given three out of four “Pinnochios” for President Obama’s misleading claim – in his kind-of-weird “Life of Julia” slideshow – that:

“Under President Obama: Julia retires. After years of contributing to Social Security, she receives monthly benefits that help her retire comfortably, without worrying that she’ll run out of savings. This allows her to volunteer at a community garden.

“Under Mitt Romney: Julia’s benefits could be cut by 40%.”

“Julia” runs afoul of the facts in a couple ways:

First, to the degree that President Obama hasn’t proposed a plan for Social Security, his plan is current law. This implies a roughly one-quarter cut in benefits for all retirees, new and old, when the trust fund runs out in 2033.

Second, the Obama administration has considered Social Security reforms that would cut benefits, such as reducing Cost of Living Adjustments (COLAs) and reducing benefits for higher earners.

Third (and this is one that just occurred to me), the supposed “40% cut” attributed to Gov. Romney wouldn’t be across the board but only for high earners. Unless Julia is assumed to be a high earner – in which case President Obama’s overall tax and spending policies would be of far less benefit to her than the slideshow might imply – she would see much smaller reductions under an actual Romney plan.

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Social Security Bulletin, Vol. 72 No. 2

Download entire publication

Available formats

The Sensitivity of Proposed Social Security Benefit Formula Changes to Lifetime Earnings Definitions

by Hilary Waldron

In policy debates, the terms "low earner" and "low income" are often used interchangeably. However, the continued presence of traditional gender roles in the division of labor between market and nonmarket hours of work suggests that for both birth cohorts currently reaching retirement and those currently of childbearing age, a sizeable number of women may have low earnings without being of low-income. This study finds that if policymakers wish to adjust future benefits and focus benefit reductions on middle or high primary or full-time wage earners in a household, the distribution of male earnings, rather than unisex earnings, would come closer to achieving such a goal. Both in the past and present, men are more likely to contribute the greater share of paid market hours worked and therefore are more likely to be the primary earner in the household.

The Implications of Marital History Change on Women's Eligibility for Social Security Wife and Widow Benefits, 1990–2009

by Howard M. Iams and Christopher R. Tamborini

Social Security retirement-age benefits in the United States reflect marital histories and lifetime earnings of current and former married couples. We examine women's marital history patterns and spouse and widow benefit eligibility over the past two decades, 1990 and 2009. Our analysis reveals substantial changes in women's marital patterns among the baby boom and generation X cohorts. We find a substantial decline in qualifying marital histories for Social Security spouse and widow benefits. The results reveal considerable variation by race and Hispanic origin.

Raising Household Saving: Does Financial Education Work?

by William G. Gale, Benjamin H. Harris, and Ruth Levine

Financial illiteracy is prevalent in the United States, and low levels of financial literacy are associated with poor financial choices and negative economic outcomes. We examine previous work on the effect of financial education on household saving and find mixed results. Workplace financial education seminars positively affect household saving, but the size of this effect varies widely across studies. The effects of other financial education initiatives are less clear, highlighting the need for rigorous econometric evaluation of efforts to improve financial literacy.

The Growth in Social Security Benefits Among the Retirement-Age Population from Increases in the Cap on Covered Earnings

by Alan L. Gustman, Thomas L. Steinmeier, and Nahid Tabatabai

This article investigates how raising the maximum level of earnings subject to the Social Security payroll tax leads to the "leakage" of portions of the additional revenue into higher benefit payments. Using data from the Health and Retirement Study, the authors simulate the effects of changes in maximum taxable earnings for cohorts approaching retirement age over a 24-year period. They find, roughly, that almost half of the additional tax revenue from having raised the maximum earnings subject to the payroll tax has leaked into higher benefits.

Introduction and Overview of the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance

The Board of Trustees reports each year on the current and projected financial condition of the Social Security program, which is financed through two separate trust funds: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. The introduction, overview, and full report are available here.

Several features from our website are also reprinted in the Bulletin each quarter.
These include

• SSI Monthly Statistics
• OASDI and SSI Program Rates & Limits
• Monthly Statistical Snapshot

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New papers from the Social Science Research Network

"Great Recession-Induced Early Claimers: Who are They? How Much Do They Lose?"
Center for Retirement Research at Boston College Working Paper No. 2012-12

MATTHEW S. RUTLEDGE, Boston College
Email: rutledma@umich.edu
NORMA B. COE, Boston College - Center for Retirement Research
Email: norma.coe.1@bc.edu

During the Great Recession, more older workers have claimed Social Security retirement benefits early. This paper addresses two important policy questions: Who are these early claimers? How much retirement income have they lost as a result of claiming early? Using the Health and Retirement Study (HRS) we estimate a discrete-time hazard model that makes claiming Social Security benefits a function of age, personal characteristics, and the national unemployment rate. We project that high unemployment rates during the Great Recession led to a 5-percentage-point increase in the probability of claiming early relative to less severe recessions such as the 2001-2003 downturn, and this increase was nearly uniform across socioeconomic groups. Our estimates also suggest that while the Great Recession did impact the claiming decision, it did not cause a dramatic change in monthly benefits. Those individuals we label as “Great Recession Claimers” – whom we simulate were likely to claim their benefits early during the Great Recession but would not have claimed them in a milder downturn – filed for Social Security only 6 months earlier, on average, than they would have in a minor recession. This modest change in timing reduced their monthly Social Security benefit checks by $56, or 4.6 percent of average monthly benefits, and the Social Security replacement rate fell by 1.7 percentage points relative to a more typical recession. The benefit reduction resulted from the combined effect of the actuarial reduction for early claiming and the foregone opportunity to continue working and increase the wage base used for calculating benefits.

"How Important is Asset Allocation to Financial Security in Retirement?"
Center for Retirement Research at Boston College Working Paper No. 2012-13

ALICIA H. MUNNELL, Boston College - Center for Retirement Research
Email: MUNNELL@BC.EDU
NATALIA ORLOVA, affiliation not provided to SSRN
Email: nataliyaorlova@mail.ru
ANTHONY WEBB, Boston College - Center for Retirement Research
Email: webbaa@bc.edu

Financial advice tends to focus on financial assets, but other levers may be more important for most households. This paper proceeds in three stages. The first section reports a simple Excel spreadsheet exercise that provides a stylized example of the tradeoff between returns and time spent in the labor force. The second section uses data from the Health and Retirement Study (HRS) on pre-retirees aged 51-64 to see how the gap between retirement needs and retirement resources is affected by working longer, taking out a reverse mortgage, controlling spending, and shifting all assets to equities with no risk. The third section uses a simple dynamic programming model to calculate a risk-adjusted measure of the value for the average household of moving from a typical conservative portfolio to an optimal portfolio. The answer from all three exercises is the same: the focus on asset allocation is misplaced.

"Simulating Utah State Pension Reform"
Brigham Young University Macroeconomics and Computational Laboratory Working Paper Series No. 2012-01

RICHARD W. EVANS, Brigham Young University
Email: revans@byu.edu
KERK PHILLIPS, Brigham Young University - Department of Economics
Email: kerk_phillips@byu.edu

In 2008, the Utah Retirement System experienced a negative return of almost 25 percent on its portfolio. This resulted in an underfunding of the pension system. In 2010 the Utah legislature reformed state pension participation, placing all new employees hired after mid-2011 in a new hybrid pension system. Employees hired prior to July 2011 continue to participate in the previous defined benefits program. This paper models and simulates the effects of Utah's pension reform on the balance in the defined benefits fund. In our baseline simulations, we find that the recent reform has extended fund solvency, but not eliminated the threat. Our simulations show that there is at least a ten percent chance of pension fund insolvency sometime in the next two decades.

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Fixing Social Security: Is America Up to It?

Carrie Lukas of the Independent Women's Forum is skeptical. Check it out over at Forbes.

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Goldwein on Disability Program: “Broken”

Over at the Hill’s blog, Marc Goldwein of the Committee for a Responsible Federal Budget writes that the Social Security Disability Insurance program is “broken.” But it’s not merely the program’s finances that are the problem:

“The Social Security disability system is broken in many ways. Not only is the program financially insolvent, but the system is wrought with fraud, needlessly complex, difficult to navigate, inconsistent and unfair in determining eligibility, inflexible to changes in the structure of the workforce, administratively overburdened, almost completely uncoordinated with other government policies, and unable to help or reward those who are interested in reentering the workforce.”

Check out the whole blog post here.

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New paper from the Congressional Budget Office

The Earned Income Tax Credit and Expected Social Security Retirement Benefits Among Low-Income Women: Working Paper 2012-6

By Molly Dahl, Jonathan Schwabish, Thomas DeLeire, and Timothy Smeeding

Abstract

Expansions in the Earned Income Tax Credit (EITC) are associated with increases in formal employment and increases in long-term year-over-year growth in earnings for single mothers. In this study, we examine whether expansions in the EITC are likely to lead to increases in Social Security retirement benefits for less-educated women (those likely to be affected by the EITC) by increasing their employment and earnings when young.

The increases in benefits could occur through two channels: First, as the EITC pulls additional less-educated women into market work, those women may accrue more quarters of employment and thus be more likely to qualify for Social Security retirement benefits. Second, to the extent that the EITC leads to increased earnings growth, less-educated women may qualify for higher benefits.

We rely on administrative earnings data from the Social Security Administration and existing estimates of the effect of the EITC on employment and earnings growth to simulate the impact of an EITC expansion on the future Social Security retirement benefits of less-educated women. The results of this simulation suggest that the EITC leads to an increase in the share of less-educated women that will be eligible for Social Security retirement benefits and leads to an increase in their monthly benefit amount. Thus, the existence of the EITC contributes to the financial security of affected women as they age and retire.

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Can we expect Social Security’s financing to get worse?

Over at National Review, Veronique de Rugy writes that the shift in the trust fund insolvency date from 2036 in the 2011 Trustees Report to 2033 in this year’s report is part of a broader trend where projections of the system’s financial health have grown worse over time.

She’s clearly right that things are not looking as good today as they had in the past (although the 2057 projection for the 1990 Trustees Report doesn’t seem right to me). 

Nevertheless, my gut is that the guesses we make in a given year are about as good as they can be, given our ignorance regarding the future. We know that things will change from year to year, but they can get better as well as worse. Though if Social Security’s finances continue to worsen, maybe I’ll have to eat my words.

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New working papers from the Center for Retirement Research

The Center for Retirement Research at Boston College has released 10 new working papers:

How Important Is Asset Allocation to Financial Security in Retirement?

by Alicia H. Munnell, Natalia Sergeyevna Orlova and Anthony Webb

Great Recession-Induced Early Claimers: Who Are They? How Much Do They Lose?

by Matthew S. Rutledge and Norma B. Coe

Economic Consequences of the Great Recession: Evidence from the Panel Study of Income Dynamics
by Barry P. Bosworth

Should Households Base Asset Decumulation Strategies on Required Minimum Distribution Tables?

by Wei Sun and Anthony Webb

Residents in Seniors Housing and Care Communities: Overview of the Residents Financial Survey

by Norma B. Coe and April Yanyuan Wu

Financial Well-being of Residents in Seniors Housing and Care Communities: Evidence from the Residents Financial Survey

by Norma B. Coe and April Yanyuan Wu

Costs and Concerns Among Residents in Seniors Housing and Care Communities: Evidence from the Residents Financial Survey

by Norma B. Coe and April Yanyuan Wu

Geographic Mobility Among Residents in Seniors Housing and Care Communities: Evidence from the Residents Financial Survey

by Norma B. Coe and April Yanyuan Wu

Effects of Employer Health Costs on the Trend and Distribution of Social Security-Taxable Wages

by Gary Burtless and Sveta Milusheva

Social Security Claiming: Trends and Business Cycle Effects

by Richard W. Johnson and Owen Haaga

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New papers from the Social Science Research Network

"What is the Role of Social Pensions in Asia?"
ADBI Working Paper 351

ARMANDO BARRIENTOS, Brooks World Poverty Institute
Email: a.barrientos@manchester.ac.uk

Rapid population aging and economic transformation in Asia raise the policy challenge of ensuring income security in old age. The main objective of this paper is to explore the potential role of social pensions and other noncontributory schemes in Asia, informed by insights from theory and international experience. The paper identifies alternative forms of providing income security in old age, including social pensions. It also examines the welfare effects of adopting alternative social pension designs, especially around two key policy nodes: the comparative advantages of social assistance and social pensions, and the integration of noncontributory transfers within advanced contributory pension schemes.

"Changing Social Security to Achieve Long-Term Solvency and Make Other Improvements - Background Factors, Issues, Options"
Cornell Legal Studies Research Paper No. 12-13

PETER W. MARTIN, Cornell Law School
Email: peter-martin@lawschool.cornell.edu

For years those responsible for Social Security and policy analysts have acknowledged that the present statutory framework for determining and financing program benefits is unsustainable. Nonetheless, despite the work of Presidential commissions, countless Congressional hearings, proposals for reform advanced by individuals and groups across the political spectrum, changes to Social Security that would restore its fiscal balance into the foreseeable future have repeatedly been deferred or deflected by the nation’s law-makers.
This paper aims to assist analysis of and reflection on the range of options for ensuring Social Security’s future while not adding yet another solvency proposal to the already ample supply. It begins with several background observations. These are followed by a discussion of personal (or private) accounts to which former President George W. Bush gave salience and which continue to be included among the talking points of politicians hostile to Social Security’s fundamental structure. Next the paper reviews the more likely program changes that would (unlike personal accounts) directly address Social Security’s long-term "deficit." That section is followed by one sketching possible revisions in the program’s benefit structure designed to achieve ends other than reducing Social Security expenditures. The paper concludes with some observations on the role that framing has played in past debates over Social Security’s future. Finally, there is an appendix explaining the central terms and components of the current program. It is provided for readers who might otherwise be unclear about the meaning or implications of changing Social Security’s "Primary Insurance Amount" formula or its "Full Retirement Age."

"Averting the Funding-Gap Crisis: East European Pension Reforms after 2008"
Global Social Policy, Forthcoming

JAN DRAHOKOUPIL, University of Mannheim - Mannheim Centre for European Social Research (MZES)
Email: jan.drahokoupil@gmail.com
STEFAN DOMONKOS, MZES
Email: stefan.domonkos@gmail.com

This paper analyses the post-2008 pension reforms in Central and East European Countries. The economic crisis revealed the unresolved problems in the implementation of previous reforms: the financing of the transformation costs. The reforms thus reacted to the legacies of past choices as well as to the exceptional circumstances of the crisis in their attempts to solve the funding-gap issue. An interplay of fiscal constraints and political conditions shaped the variety of reform outcomes.

"Australia's Retirement System Reform Agenda"

JEREMY COOPER, Challenger Limited
Email: jcooper@challenger.com.au

This paper explores the background to the reforms to the Australian retirement savings system known as 'Stronger Super'.

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