Social SecurityThis paper, a forthcoming chapter in the Handbook of Public Economics, reviews the theoretical and empirical issues dealing with Social Security pensions. The first part of the paper discusses pure pay-as-you-go plans. It considers the effects of introducing such a plan on the present value of consumption, the optimal level of benefits in such plans, and the emprical research on the effects of pay-as-you-go pension systems on labor supply and saving. The second part of the paper discusses the transition to investment-based systems, analyzing the effect on the present value of consumption of such a transition and considering such issues as the distributional effects and risk associated with such systems. |
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accumulated analysis annuity assets benchmark budget Bureau of Economic capital stock Chicago Press cohort deadweight loss Diamond discounted earnings Economic Research effect Feldstein finance future gain Handbook.textmfjl.jul31 impact of Social implicit rate implies increase individual accounts investment based system Journal Kotlikoff labor force labor supply Liebman marginal utility Martin Feldstein means tested myopic National Bureau national saving net present value old age optimal paid paper pay-as-you-go program pay-as-you-go system pay-as-you-go tax payroll tax payroll tax rate Pension percent period personal retirement account Policy political portfolio Poterba prefunding present value consumption product of capital put option Ranguelova rate of return receive redistribution reduce retirement benefits Risk Aspects Samwick Securit Shoven social discount rate Social Insurance Social Security benefits Social Security program Social Security Reform Social Security system Social Security wealth T₁ transition Trust Fund U.S. Social Security unfunded University of Chicago utility wage workers