How Well Does the US Social Insurance System Provide Social Insurance?

Mark Huggett and Juan Carlos Parra ()

Working Papers from Georgetown University, Department of Economics

Abstract: This paper answers the question posed in the title within a model where agents receive idiosyncratic, wage-rate shocks that are privately observed. When the model social insurance system is comprised by the US social security and income tax system, then the maximum ex-ante welfare gain to improved insurance is equivalent to a 12.3 percent increase in consumption. We determine the reasons behind this large welfare gain. We also analyze two parametric reforms of the model social insurance system. One reform increases welfare very little, whereas the other achieves nearly all of the maximum possible welfare gain.

Keywords: Social Insurance; Social Security; Idiosyncratic Shocks; Private Information (search for similar items in EconPapers)
JEL-codes: D80 D90 E21 (search for similar items in EconPapers)
Date: 2006-06-11
New Economics Papers: this item is included in nep-dge, nep-ias and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Journal Article: How Well Does the U.S. Social Insurance System Provide Social Insurance? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~06-06-11

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