Is Social Security behind the Collapse of Personal Saving?

Frank Caliendo

No 2746, CESifo Working Paper Series from CESifo

Abstract: This paper considers the quantitative role of growth in the size of the social security program in contributing to the collapse of personal saving in the U.S. over the last few decades. Using a calibrated, general equilibrium life-cycle model this paper shows that social security may not be to blame. Specifically, the model predicts that a 50-percent increase in the social security tax rate (as in the U.S. over the last half century) produces a modest decline in the personal saving rate from 10 percent down to 9.6 percent. This result runs counter to some popular opinion.

Keywords: NIPA personal saving rate; social security; life-cycle permanent-income model; general equilibrium calibration (search for similar items in EconPapers)
JEL-codes: D91 E21 H55 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2746

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