Social Security reform: three Rawlsian options

Erin Cottle Hunt and Frank Caliendo

International Tax and Public Finance, 2020, vol. 27, issue 6, No 8, 1582-1607

Abstract: Abstract To maintain long-run solvency in light of changing demographics, the US Social Security system needs to be reformed. We present three reform options that protect the retirement benefits of the economically vulnerable while also balancing the Social Security budget. We refer to these three options as Rawlsian reforms because, with each reform option, the Social Security benefits of those at the low end of the income distribution are left intact. Two of our reforms break the link between the benefit cap and the tax cap by lowering the benefit cap. We explore the effect of each reform on ex-ante expected utility, the distribution of private savings, and the distribution of lifetime income in a life-cycle model.

Keywords: Social Security reform; Inequality; Rawlsian welfare (search for similar items in EconPapers)
JEL-codes: E6 H3 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10797-020-09607-4

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