Social Security Reform with Heterogeneous Mortality

John Jones and Yue Li

Review of Economic Dynamics, 2023, vol. 48, 320-344

Abstract: Using a heterogeneous agent, life-cycle model of Social Security claiming, labor supply and saving, we consider the implications of lifespan inequality for Social Security reform. Quantitative experiments show that welfare is maximized when baseline benefits are independent of lifetime earnings, the payroll tax cap is 50% larger than its current level, and claiming adjustments are reduced. The Social Security system that would maximize welfare in a "2050 demographics" scenario, characterized by longer lifespans and an increased education-mortality gradient, is similar to the one that would maximize welfare today. (Copyright: Elsevier)

Keywords: Social Security; Mortality; Labor supply; Welfare (search for similar items in EconPapers)
JEL-codes: E21 H24 H55 I38 J11 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1016/j.red.2022.06.003

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