quantifying the inefficiency of the US social insurance system

Mark Huggett () and Juan Carlos Parra ()
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Mark Huggett: Economics Department Georgetown University

No 55, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: How far is the US social insurance system from an efficient system? We answer this question within a model where agents receive idiosyncratic, labor-productivity shocks that are privately observed. When social security and income taxation comprise the social insurance system, the maximum possible efficiency gain is equivalent to a $12.3$ percent increase in consumption. This occurs when labor productivity differences are set to the permanent differences estimated in US data.

Keywords: private information; efficient allocations; social security (search for similar items in EconPapers)
JEL-codes: D80 D90 E21 (search for similar items in EconPapers)
Date: 2006
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Related works:
Working Paper: Quantifying the Inefficiency of the US Social Insurance System (2005)
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