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The Effects of Differential Income Replacement and Mortality on U.S. Social Security Redistribution

Li Tan () and Cory Koedel
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Li Tan: Department of Economics at the University of Missouri

No 1701, Working Papers from Department of Economics, University of Missouri

Abstract: We study redistribution via the United States Social Security retirement system for cohorts of men born during the second half of the 20th century. Our focus is on redistribution across race and education groups. The cohorts we study are younger than cohorts studied in previous, similar research and thus more exposed to recent increases in earnings inequality. All else equal, this should increase the degree of progressivity of Social Security redistribution due to the structure of the benefit formula. However, we find that redistribution is only modestly progressive for individuals born as late as 1980. Differential mortality rates across race and education groups are the primary explanation. While black-white mortality gaps have narrowed some in recent years, they remain large and dull progressivity. Mortality gaps by education level are also large and unlike the gaps by race, they are widening, which puts additional regressive pressure on Social Security redistribution.

Keywords: Earnings forecast; Bayesian forecasting; Social Security; Social Security progressivity; Social Security projections (search for similar items in EconPapers)
JEL-codes: H55 J18 J32 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2017-01, Revised 2019-06
New Economics Papers: this item is included in nep-age, nep-for, nep-lab, nep-pbe and nep-pub
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Journal Article: The Effects of Differential Income Replacement and Mortality on U.S. Social Security Redistribution (2019) Downloads
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