New papers from the Social Science Research Network

"Labor-force Participation Rates of the Population Ages 55 and Older, 2013"
EBRI Notes, Vol. 35, No. 4 (April 2014)

CRAIG COPELAND, Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG

This paper examines the most recent U.S. Census Bureau data on labor-force participation among Americans ages 55 and older in 2013, including an analysis of the trends following the economic recession that started in late 2007-early 2008 and the slow recovery thereafter. The labor-force participation rate measures the fraction of individuals within a specific group (in this case those 55 or older) who are working or actively pursuing work. The first section uses annualized data on labor-force participation from the Current Population Survey (CPS), available from the Bureau of Labor Statistics website. However, these data provide only an overall picture, with few specific demographic details. In order to examine additional demographic trends of the U.S. population, the second section uses data from the March 2013 Supplement to the CPS. The labor-force participation rate for those ages 55 and older rose throughout the 1990s and into the 2000s, when it began to level off but with a small increase following the 2007-2008 economic downturn. For those ages 55-64, the upward trend was driven almost exclusively by the increased labor-force participation of women, whereas the male participation rate was flat to declining. However, among those ages 65 or older, the rate increased for both males and females over that period. This upward trend in labor-force participation by older workers is likely related to workers’ current need for continued access to employment-based health insurance and for more years of earnings to accumulate savings in defined contribution (401(k)-type) plans and/or to pay down debt. Many Americans also want to work longer, especially those with more education for whom more meaningful jobs are available that can be performed into older ages. Younger workers’ labor-force participation rates increased when that of older workers declined or remained low during the late 1970s to the early 1990s. But as younger workers’ rates began to decline in the late 1990s, those for older workers continuously increased. Consequently, it appears either that older workers filled the void left by younger workers’ lower participation, or that higher older-worker participation limited the opportunities for younger workers or discouraged them from participating in the labor force.
The PDF for the above title, published in the April 2014 issue of EBRI Notes, also contains the fulltext of another April 2014 EBRI Notes article abstracted on SSRN: “Characteristics of the Population With Consumer-Driven and High-Deductible Health Plans, 2005-2013.”

"Social Security Reform: The Politics of the Payroll Tax"
Quinnipiac Law Review, Vol. 32, No. 1, p. 1, 2013
Thomas Jefferson School of Law Research Paper No. 2377506

BENJAMIN A. TEMPLIN, Thomas Jefferson School of Law
Email: btemplin@tjsl.edu

This Article examines the principal reform proposals that would increase tax revenue for the Social Security trust fund — weighing the pros and cons of each. The Article also considers the prospects for political agreement on a reform proposal given the past efforts and the looming crisis.
Part I of the Article recounts the latest data as of 2013 on insolvency projections and discusses the methods by which the Office of the Chief Actuary measures the effect of proposed reforms. Part II provides an overview of the payroll tax and benefit calculations. The factors used in calculating both tax and benefits are key components used in many reform proposals.
The Article focuses on two types of tax reform proposals: (1) proposals that increase the tax rate, which are the subject of Part III; and (2) proposals that increase the maximum taxable income rate, which are discussed in Part IV. Part V examines the political realities of reform proposals and suggests ways in which political bargaining can be structured to maximize the chances of a proposal being adopted.

"Modeling Life Expectancy at Birth for Multi-Population: A Cointegration Approach"

NTAMJOKOUEN SOBGNI ACHILLE, University of Bergamo
Email: ntamjo2003@yahoo.fr

The continuous improvements in mortality rates and life expectancy in the last century have been given particular attention from academics, life insurers, financial engineers and pension planners, particularly in developed countries. Mortality-linked securities such as longevity bonds, survivor swaps or mortality forward have appeared recently in the industry to help operators to hedge such risks. It appears to be crucial to improve the accuracy of future life expectancy. In this paper, we investigate time varying dependency associated with common trends which drive regional life expectancy within Canada. We aim to compare the three main models appeared recently in literature such as autoregressive integrated moving average (ARIMA), vector autoregressive model (VAR) and the vector of error correction model (VECM), to analyse the common factors that have determined a progressive shift of life expectancy in six Canadian regions. The latter shows better performance over VAR and ARIMA in terms of backtesting and ability to capture the dynamics of common life expectancy. These results contrast with what has been done in the existing literature. Findings from this analysis are useful for local insurers in their goal to project life expectancy improvements and also to forecast the future trends.

"Adding Employer Contributions to Health Insurance to Social Security's Earnings and Tax Base"
Boston College Center for Retirement Research Working Paper No. 2014-3

KAREN E. SMITH, Urban Institute
Email: ksmith@ui.urban.org
ERIC J. TODER, Urban Institute
Email: etoder@urban.org

The inclusion of employer-sponsored health insurance (ESI) in taxable income would increase income and payroll tax receipts, but would also increase Old Age, Survivors, and Disability Insurance (OASDI) benefits by adding ESI to the OASDI earnings base. This study uses the Urban Institute’s DYNASIM model to estimate the effects of including ESI premiums in taxable earnings on the level and distribution by age and income groups of income tax burdens, payroll tax burdens, and OASDI benefits. We find that the increased present value of OASDI benefits from including ESI in the wage base in 2014 offsets about 22 percent of increased income and payroll taxes, 57 percent of increased payroll taxes, and 72 percent of increased OASDI taxes. The overall distributions of taxes and benefits by income group follow the same pattern, with both taxes and benefits increasing as a share of income between the bottom and middle quintiles and then declining as a share of income for higher income taxpayers. But households in the bottom income quintiles receive a net benefit from including ESI in the tax base because their increase in OASDI benefits exceeds their increase in income and payroll taxes. Over a lifetime perspective, all earnings groups experience net tax increases, but workers in the middle of the earnings distribution experience the largest net tax increases as a share of lifetime earnings. Higher benefits offset a larger share of tax increases for lower than for higher income groups.

"Social Security in South Africa -- A Gender and Human Rights Analysis"

BETH GOLDBLATT, University of New South Wales (UNSW) - Faculty of Law
Email: b.goldblatt@unsw.edu.au

South Africa has a large social assistance programme that plays a critical role in addressing extreme poverty. The strong constitutional rights framework, including a right to social security, underpins the development of this programme. Women are the major recipients of social assistance grants but in most cases collect grants for the benefit of their children (in the form of Child Support Grants). Working age people who are able-bodied are not provided with social assistance despite the high levels of unemployment in the country. Women, who are poorer with less access to paid work, are most disadvantaged by this gap. A recent move to attach conditions to the Child Support Grant is analysed from a gender and human rights perspective. The article considers some of the arguments relating to ‘conditionality’ in social security and finds that this move is unnecessary, impractical and a possible violation of human rights as well as a worrying trend in a system that has previously made little use of conditions. The article concludes by proposing a deliberative process of ensuring that the social security right becomes a gender-responsive vehicle for fundamental social change.