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Social Security's Treatment of Postwar Americans

Social Security's Treatment of Postwar Americans

How Bad Can It Get?

Chapter:
(p.207) 6 Social Security's Treatment of Postwar Americans
Source:
The Distributional Aspects of Social Security and Social Security Reform
Author(s):
Jagadeesh Gokhale, Laurence J. Kotlikoff
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226241890.003.0007

This chapter utilizes an extensive simulation model to produce lifetime incomes of current and future employees, and evaluates the impacts of alternative reforms on the implicit rates of return that individuals in different income and demographic groups receive on their Social Security taxes. It is found that education seems to trump income in explaining longevity. All ten of the policies on Old-Age and Survivors' Insurance (OASI) decrease the system's liability to postwar Americans. Sex, race, and education play a role in determining current and prospective OASI treatment of postwar Americans. Despite of this, the primary determinant of this treatment is an individual's cohort and position in the distribution of lifetime earnings. It is assumed that the OASI system will continue to run on a pay-as-you-go (PAYGO) basis and considers alternative reforms to achieve financial solvency.

Keywords:   simulation model, lifetime incomes, alternative reforms, Social Security, taxes, postwar Americans, sex, race, education, Old-Age and Survivors' Insurance

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