Privatizing Social Security: First Round Effects of a Generic, Voluntaryprivatized U.S. Social Security System

52 Pages Posted: 16 Jul 2000 Last revised: 24 Sep 2010

See all articles by Alan L. Gustman

Alan L. Gustman

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography

Date Written: November 1995

Abstract

This paper investigates individual responses to a simple scheme to privatize social security. The analysis explores the sensitivity of outcomes to how individuals project life expectancy, how they value spouse and survivor benefits, and to expected future reductions in social security benefits. Depending on assumptions made, first year participation ranges from 20% to almost 100%. Estimated time paths for taxes decline immediately with privatization, but the decline in benefits grows slowly over a period of two or three decades. Labor force participation rates are not greatly affected by privatization, even if major changes in pensions are induced.

Suggested Citation

Gustman, Alan L. and Steinmeier, Thomas L., Privatizing Social Security: First Round Effects of a Generic, Voluntaryprivatized U.S. Social Security System (November 1995). NBER Working Paper No. w5362, Available at SSRN: https://ssrn.com/abstract=225425

Alan L. Gustman (Contact Author)

Dartmouth College - Department of Economics ( email )

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Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography ( email )

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United States
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