Social security with differential mortality

Bishnu, Monisankar; Guo, Nick; Kumru, Çağri S.

doi:10.1016/j.jmacro.2018.11.005

Cited by 15 publications

(9 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, as numerous studies have found, such as Lleras-Muney (2005), Meara, Richards, and Cutler (2008), Bound et al (2015), and Chetty et al (2016), mortality risk tends to decline with education and income. Taking the relationship between income and mortality as given, Sánchez-Romero and Prskawetz (2017), Bagchi (2019), and Bishnu, Guo, and Kumru (2019) each investigate how the progressivity of PAYG Social Security is impacted by differential mortality and show that the progressivity of PAYG systems is negatively impacted by mortality inequality. The general consensus from this literature is that mortality differentials have a significant impact on the economic efficiency of Social Security systems and therefore must be accounted for in the design of such programs.…”

Section: Literature Reviewmentioning

confidence: 99%

Growth and Welfare Implications of Mortality Differentials in Unfunded Social Security Systems

Kelly

2022

Public Finance Review

View full text Add to dashboard Cite

Several recent studies have examined the steady-state welfare implications of mortality differentials within unfunded Social Security systems, concluding that these differentials undermine the progressivity of the system and make society worse-off relative to alternative public pension schemes. This study is the first to systematically investigate the long-run implications of mortality inequality within the U.S. Social Security system. Utilizing an OLG endogenous growth model of the U.S. economy, I compare the current pay-as-you-go (PAYG) system to versions of the model without either mortality differentials or income inequality. I find that the assumption of mortality homogeneity biases the equilibrium growth rate and welfare analysis. The PAYG system is also compared to a fully funded system based on capital subsidies. The model predicts that PAYG suppresses growth and that, for a given range of subsidy rates, the fully funded system Pareto dominates PAYG in both the medium-run and the long-run.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Growth and Welfare Implications of Mortality Differentials in Unfunded Social Security Systems

Kelly

2022

Public Finance Review

View full text Add to dashboard Cite

show abstract

“…Additional educational achievement correlates not only with a longer life but also with a longer time of receiving pension benefits, implying regressivity of the pension system (e.g., Brown et al, 2006;Coronado et al, 2011;Goda et al, 2011). Some debate exists about whether welfare gains through reduced regressivity could be achieved by fundamental reforms of the benefit formula (e.g., Bagchi, 2019;Bishnu et al, 2019;Bommier et al, 2011;Krieger et al, 2020); one prominent example being the Boskin proposal for the United States that recommends separating US Social Security into insurance and transfer components (Boskin, 1986). 6 Given our focus on policies implemented during work life and through changes in entitlement provisions, we will not consider policies along those lines here.…”

Section: Existing Measures Of Intra-generational Redistributionmentioning

confidence: 99%

Measuring intra-generational redistribution in PAYG pension schemes

Klos¹,

Krieger

2021

Public Choice

View full text Add to dashboard Cite

Voters in ageing societies expect pension reforms to be both inter-generationally and intra-generationally fair. In this paper, we propose a global measure of intra-generational redistribution in pay-as-you-go pension schemes as a basis for voters’ evaluations of reforms. Our novel index only requires information on contributions by and pension benefits paid to retirees, enabling us to measure intra-generational redistribution isolated from possible inter-generational redistribution. We rely on the contribution records of approximately 100,000 Germans, who progressed into retirement in 2007–2015, to measure the level of intra-generational redistribution in the German statutory pension scheme (GRV). A recent reform of the childcare benefit provision, which became effective in 2014, confirms the predictions of our index. The reform introduced additional benefits for a substantial subgroup of German mothers, owing to which the index value for women, but not for men, jumps up. Our findings suggests that GRV fulfills the ideal of a Bismarckian pension system without intra-generational redistribution for men, while women benefit significantly from intra-generational redistribution.

show abstract

“…This simplification means we miss the redistribution that occurs because of the progressivity of Social Security benefits. Social Security also redistributes toward those who enjoy a longer lifespan and the wealthy tend to live longer than the poor (see Bishnu et al, 2019;Coronado et al, 1999Coronado et al, , 2002Coronado et al, , 2011Goda et al, 2011;Liebman, 2002).…”

Section: Fbmentioning

confidence: 99%