On the Distributional Effects of Social Security Reform

Mark Huggett () and Gustavo Jaime Ventura ()

No 9801, Working Papers from Centro de Investigacion Economica, ITAM

Abstract: How will the distribution of welfare, consumption and leisure across households be affected by social security reform? This paper addresses this question for social security reforms with a two-tier structure by comparing steady states under a realistic version of the current US system and under the two-tier system. The first tier is a mandatory, defined-contribution pension offering a retirement annuity proportional to the value of taxes paid, whereas the second tier guarantees a minimum retirement income. Our findings, which are summarized in the introduction, do not in general favor the implementation of pay-as-you go versions of the two-tier system for the US economy.

Date: 1998-01
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Related works:
Working Paper: On the Distributional Effects of Social Security Reform (1997)
Journal Article: On the Distributional Effects of Social Security Reform (1999)
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