New Estimates of the Redistributive Effects of Social Security

Year: 
2017
Working Paper Number: 
WP 17-01
Abstract: 

We forecast lifetime earnings of young workers to study the redistributive effects of Social Security, prospectively. Using data from an older generation of workers, we first establish that our forecasting method can recover the actual distribution of Average Indexed Monthly Earnings taken from Social Security Administration records. We then extend the method to forecast Social Security returns for recent cohorts and examine redistributive trends. Our methods and data are accessible, facilitating straightforward replications and extensions. Focusing on redistributions across race and education groups, and on men’s own benefits, we show that Social Security exhibits little progressivity, and little progressivity improvement, for recent cohorts.

JEL Codes: 
H55, J18, J32
Authors: 

Li Tan

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