Social Insurance and Wealth Distribution

Minchung Hsu

Economics Bulletin, 2011, vol. 31, issue 1, 687-698

Abstract: This paper aims to determine whether and, if so, how the existence of a means-tested, asset-based social insurance program and the potential reform thereof impacts wealth distribution in the United States. A dynamic equilibrium model that could generate several features of the current state of wealth distribution in the United States was developed to investigate to the extent to which social insurance programs affect wealth distribution in the United States. The results of several experiments and robustness tests performed using this model suggest that entirely eliminating the U.S. social insurance system would decrease the Gini coefficient from its current value of approximately 0.8 to less than 0.6. However, the results also indicate that reforming the social insurance system, whether by expanding or contracting it by 20%, would have no significant impact on wealth distribution.

Keywords: means-tested social insurance; wealth distribution (search for similar items in EconPapers)
JEL-codes: D3 E6 (search for similar items in EconPapers)
Date: 2011-02-26
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