Download This PaperQuantifying the Inefficiency of the Us Social Insurance System
46 Pages Posted: 12 Oct 2005
Date Written: August 2005
Abstract
How far is the US social insurance system from an efficient system? We answer this question within a model where agents receive idiosyncratic, labor-productivity shocks that are privately observed. When social security and income taxation comprise the social insurance system, the maximum possible efficiency gain is equivalent to a 10.5 percent increase in consumption. This occurs when labor productivity differences are set to the permanent differences estimated in US data.
Keywords: social security, idiosyncratic shocks, efficient allocations, private information
JEL Classification: D80, D90, E21
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Missing Piece in Policy Analysis: Social Security Reform
-
By John Geanakoplos, Olivia S. Mitchell, ...
-
By John Geanakoplos, Olivia S. Mitchell, ...
-
How Effective is Redistribution Under the Social Security Benefit Formula?
-
How Effective is Redistribution Under the Social Security Benefit Formula?
-
Would a Privatized Social Security System Really Pay a Higher Rate of Return?
By John Geanakoplos, Olivia S. Mitchell, ...