SSRN: Recent Pension and Retirement Papers
December 1, 2005
"Do the Elderly Respond to Taxes on Earnings? Evidence from the
Social Security Retirement Earnings Test"
BY: DAVID LOUGHRAN
The RAND Corporation
STEPHEN J. HAIDER
Michigan State University
Department of Economics
Date: January 2005
ABSTRACT:
The effective tax on earnings embodied in the Social Security
retirement earnings test has been as high as 50 percent.
Surprisingly, among the numerous empirical studies that have
examined the earnings test, there is little agreement about
whether the earnings test affects elderly labor supply at all.
This paper examines new and reconsiders existing empirical
evidence on the earnings test and conclude that, at least for
men, the earnings test has a substantial impact on labor supply
and claiming behavior.
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"Reforming Public Pensions in the US and the UK"
BY: PETER A. DIAMOND
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=777946
ABSTRACT:
This essay describes the current debate on reforming Social
Security in the US, along with a brief description of how the
program works. Along the way it comments on the quality of some
proposed reform proposals as well as their political standing.
Where issues are similar, some inferences are drawn for the UK.
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"Household Saving Rates and the Design of Social Security
Programmes: Evidence from a Country Panel"
BY: RICHARD F. DISNEY
University of Nottingham
Axia Economics
Institute for Fiscal Studies (IFS)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=831484
ABSTRACT:
I argue that the offsetting effect of social security
contributions on household retirement saving depends on how
closely the social security programme imitates a private
retirement saving plan (i.e. the "actuarial" component of the
social security programme) - the closer the design of the
programme to a private retirement saving plan, the higher the
offset. I estimate the determinants of household saving rates in
a cross-country panel, augmenting standard measures of social
security programme generosity and cost by indicators that proxy
the actuarial component of the programme. These indicators
affect saving rates as predicted; moreover they also affect
labour force participation rates of older women (but not men).
The findings are consistent with the view that more
actuarially-based public programmes are treated by participants
as a mandatory saving programme rather than as a
tax-and-transfer system, thereby raising labour force
participation rates but also increasing the programme's
substitutability for private retirement saving.
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"Accounting for Social Security Benefits"
BY: HOWELL EDMUNDS JACKSON
Harvard University
Harvard Law School
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=839246
ABSTRACT:
Every year, the Social Security Administration mails Social
Security Statements to all eligible workers over the age of 25.
These Statements include estimates of monthly retirement and
other benefits that participants are projected to receive under
the Social Security Act. The Statements also summarize Social
Security Administration (SSA) records about participants'
earnings history, which determines benefit levels, and provide
various background information about the Social Security program
and its finances. For many Americans, the Social Security
Statement is the principal source of information about Social
Security benefits. This paper analyzes the content of the
current Social Security Statement. While the Social Security
Statements are useful tools for certain kinds of financial
planning and allow participants to check the accuracy of the
Administration's records of their earnings history, the
Statements may also lead participants to misinterpret the value
of their Social Security benefits and may make it difficult for
participants to compare Social Security benefits to other
sources of retirement savings. In addition, the current Social
Security Statements obscure the extent to which additional years
of labor market participation increase the value of Social
Security benefits. After reviewing the strengths and weakness of
the current structure of Social Security Statements, the chapter
then describes how these statements might be supplemented with
estimates of the actuarial value of Social Securities benefits
for individual participants. This supplemental information would
make it easier for participants to compare Social Security
benefits to other sources of retirement incomes, and would
highlight the manner in which participants' Social Security
benefits accrue over time thereby mitigating some of the labor
market inefficiencies associated with Social Security payroll
taxes. The chapter concludes with a review of several potential
drawbacks of supplementing Social Security Statements with
accrued values, including the possibility that this supplemental
information would make it more difficult to change Social
Security benefits in the future, the possibility that disclosing
the accrued value of Social Security benefits could lead some
workers to make offsetting reductions in other forms of
retirement savings, and the possibility that this supplemental
information might make the redistributive aspects of the Social
Security system more transparent, potentially weakening support
for the program among some constituencies.
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"The Social Security Trust Funds and Public Saving"
BY: THOMAS L. HUNGERFORD
Congressional Research Service
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=828593
Date: October 17, 2005
ABSTRACT:
The Social Security program is one of the most popular and
successful government programs in the United States. At the end
of 2004, the OASDI trust funds held almost $1.7 trillion in
Federal government bonds and notes. It is projected that the
trust funds assets will be equivalent to over 20 percent of GDP
by 2020. Several recent studies have concluded that the
increases in the trust funds have been more than offset by
reductions in surpluses elsewhere in the federal budget.
Consequently, public saving has fallen as a result of the trust
fund build-up since the mid-1980s. This study reexamines this
issue and finds that the trust fund has had no impact on the
rest of the federal budget.
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"Early Retirement: Free Choice or Forced Decision?"
BY: DAVID DORN
University of St. Gallen - Research Institute for
Labour Economics and Labour Law
ALFONSO SOUSA-POZA
University of St. Gallen
Department of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=831486
ABSTRACT:
Early retirement is usually explained as a supply-side
phenomenon. However, early retirement can also be a demand-side
phenomenon arising from a firm's profit maximization behavior.
This paper analyzes voluntary and involuntary early retirement
based on international microdata covering 19 industrialized
countries. The results indicate that generous early retirement
provisions of the social security system do not only make
voluntary early retirement more attractive for individuals, but
also induce firms to encourage more employees to retire early.
In particular, firms seem to use early retirement to reduce
staff during economic recessions and as a means to circumvent
employment protection legislation.
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"Social Security in United States Treaties and Executive
Agreements"
BY: ALLISON CHRISTIANS
University of Wisconsin Law School
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=822504
Date: September 2005
ABSTRACT:
The employee dispatched by her company to work temporarily in
international destinations is not a new phenomenon, but social
structures between which the worker may move have arguably never
been more complex. In a world of social insurance programs that
feature broad contribution requirements coupled with limitations
on benefits, global workers may be required to contribute in
multiple jurisdictions, yet be eligible for benefits in none.
Having introduced its own social insurance program in the 1930s
when workers were much less likely to be sent on temporary
cross-border assignments, the United States social security
system has had to adapt to the increasingly international
workforce. Adaptation has occurred over the last two decades in
the form of coordination of taxes and benefits through
treaty-like instruments called executive agreements. However,
some matters of social security taxation, like other tax
matters, have traditionally been addressed in income tax
treaties. This article examines the role of tax treaties and
executive agreements in the administration of the United States
social security program, discusses some of the conflicts and
issues that arise due to the use of multiple and potentially
conflicting instruments, and suggests ways in which
international coordination of social security could be improved
in the United State
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