Econometric models and the study of the economic effects of Social Security

This article provides a relatively nontechnical discussion of previously published research on the use of econometric models in the study of the economic effects of social security. It illustrates the role of econometric model building by focusing on three major applications: forecasting, policy simulation, and hypothesis testing. A series of three macroeconomic examples serves to emphasize that the development and use of such models puts the focus of the analysis on the underlying economic structure. The first example presents a program-specific model of the Social Security system, the second a large-scale model of the U.S. economy, and the third a single-equation analysis of a specific issue.     

Social funds and local government: the case of Malawi

Two instruments—social funds and decentralization—are currently quite popular policy instruments being adopted in many developing countries throughout the world. Each of these instruments is currently being used or is being implemented in Malawi, Africa. While each instrument is intended to improve the flow of public services in a locality, the article discusses how each has certain potential theoretical advantages over the other. The article then goes on to describe and analyze the flow of resources to Malawian communities under the two largest social action programs, neither of which currently relies on substantial inputs, financial or human, from local governments. The data illustrates a wide disparity in the per capita amounts allocated to these demand‐driven initiatives across districts but also shows the relatively diverse set of local public services supported by the funds. The article close with a discussion of how these two initiatives might be merged within the context of the new Local Government Act 1998, under which local services are to be devolved in the near future. Copyright © 2000 John Wiley & Sons, Ltd.     

论内保工作发展趋势——走社会保安服务之路

传统内保工作体制受到市场经济的挑战,改革这种体制是大势新趋.本文认为内保工作走社会保安服务之路是社会化分工的需要,是经济发展的趋势,是西方发达国家政府鼓励发展的方向,它比传统的内保工作具有明显的优势,走社会保安服务之路是今后内保工作发展的趋势.     

对农民工社会保障问题的思考

随着金融危机的结束,大批农民工再次涌入城市,伴随着新生代农民工群体的出现,农民工群体不断壮大,他们为城市建设作出了巨大贡献,但自身的生活、工作条件却极为艰苦。应当通过广泛的社会保障解决农民工在工作和生活中的困难,保障农民工的合法权益。     

社会保障立法的价值取向

一个没有完善的社会保障法律制度的社会,不可能是一个和谐的社会.社会保障法律制度在构建社会主义和谐社会中的价值是巨大的,具体表现在:维护社会安全,追求社会公平,保障基本人权,促进社会和谐等方面.     

Military veterans and Social Security

There are 9.4 million military veterans receiving Social Security benefits, which means that almost one out of every four adult Social Security beneficiaries has served in the United States military. In addition, veterans and their families make up almost 40 percent of the adult Social Security beneficiary population. Policymakers are particularly interested in military veterans and their families and have provided them with benefits through several government programs, including Social Security credits, home loan guarantees, and compensation and pension payments through the Department of Veterans Affairs. It is therefore important to understand the economic and demographic characteristics of this population. Information in this article is based on data from the March 2004 Current Population Survey, a large, nationally representative survey of U.S. households. Veterans are overwhelmingly male compared with all adult Social Security beneficiaries who are more evenly split between males and females. Military veterans receiving Social Security are more likely to be married and to have finished high school compared with all adult Social Security beneficiaries, and they are less likely to be poor or near poor than the overall beneficiary population. Fourteen percent of veterans receiving Social Security benefits have income below 150 percent of poverty, while 25 percent of all adult Social Security beneficiaries are below this level. The higher economic status among veterans is also reflected in the relatively high Social Security benefits they receive. The number of military veterans receiving Social Security benefits will remain high over the next few decades, while their make-up and characteristics will change. In particular, the number of Vietnam War veterans who receive Social Security will increase in the coming decades, while the number of veterans from World War II and the Korean War will decline.     

Public attitudes toward Social Security

In the early years of the Social Security program, public support for old-age pensions was high but knowledge and understanding about benefits and taxes were low. Understanding has greatly increased, even though the program has expanded, and support for Social Security has remained high. Data from the surveys and polls examined in this article indicate that support for Social Security was strong even during the late 1970's and early 1980's, when a fiscal crisis generated a crisis of confidence in the public's perception of the system's ability to pay benefits in the future. The proportion of the American public declaring confidence in the program declined sharply from a large majority with confidence (63 percent) in 1975 to a minority with confidence (39 percent) in 1978. Following the restoration of program financing through the provisions in the 1983 amendments, the trend has reversed. By 1988, nearly one-half of the public expressed confidence in the future of the Social Security program. For the most part, other aspects of public opinion regarding Social Security have shown great stability over the years. The program is popular and has been well-supported. Support for the Government to spend more for Social Security has been consistently high, as has support for benefits to increase with inflation and for benefits to increase even if it means higher taxes. Many individuals rely on income from Social Security or expect to rely on it when they retire. It is clear that the public wants the program to continue. If participation were optional, about three-fourths of the population would stay in the program.     

Social Security as Poverty's Guardian

Although social security programs were originally introduced as measures to reduce the poverty of needy groups, factors such as coverage, vestedness, administrative regulations and the so-called "wage stop" effectively prevent millions of people throughout the world from living decently when their only source of income is from social security. In the overwhelming majority of social security programs worldwide, including old-age pensions, illness and maternity programs, workers compensation, and family or children's allowances, coverage is open only to workers and usually excludes housewives, transient workers, agricultural laborers, new immigrants and part-time workers. Similarly, vestedness requirements effectively prevent many people from receiving benefits. Administrative regulations, including waiting times and proof of status, add to the difficulties many people have in getting social security benefits. Most importantly, the stipulation in almost every program that no one should be able to get from welfare programs that which he or she could get from wages or salaries keeps the level of payments far below the poverty line. This paper will document and demonstrate the influence of social security programs throughout the world in contributing to the maintenance of poverty and will propose some radical solutions for overcoming the problem.     

Hispanics, Social Security, and Supplemental Security Income

The U.S. Census Bureau reports that Hispanics are the country's largest and fastest growing minority, representing about 14.4 percent of the population in 2005 (Census Bureau 2006b). By 2050, Hispanics will account for an estimated 24.4 percent of the population--or 1 in every 4 persons in the United States (Census Bureau 2004, Table 1 a). The Hispanic population tends to be younger than the overall population and currently represents a relatively small but growing fraction of the Social Security beneficiary population. The representation of Hispanics in the Supplemental Security Income (SSI) program, however, approximates that of their representation in the overall population. This article compares the Hispanic population with the overall population along several dimensions, with a particular focus on the Social Security beneficiary and SSI recipient populations. Data are drawn mainly from the 2005 Public Use Microdata Sample of the American Community Survey (ACS PUMS), a relatively new data source with a rich set of economic and demographic variables. Fully implemented nationwide for the first time in 2005, the ACS became the largest household survey in the United States with a sample of almost 3 million addresses. The analysis using the ACS finds that the Hispanic population is significantly different from the general population, particularly in the areas of age distribution, educational attainment, and economic well-being. Compared with the general population, the Hispanic segment is younger and is characterized by lower levels of educational attainment and a higher rate of poverty. The Hispanic Social Security beneficiary population also differs significantly from the general beneficiary population in the same areas. In contrast, the Hispanic and general SSI populations are more comparable with regard to age and economic status and differ significantly only with regard to education.     

Reforming Social Security and Medicare

Books reviewed:
Sheila Burke, Eric Kingson and Uwe Reinhardt, (eds.) Social Security and Medicare, Individual versus Collective Risk and Responsibility     

社会保障X-低效率现象辨析

由于政府失灵、制度设计管理缺陷、道德风险与负面激励等客观诱因的存在,社会保障制度作为社会的稳定器和安全网,其效率目标在运作过程中会产生一定漏出量,从而引发投入-产出效率较差或较低的X-低效率现象。     

Justifying Public Provision of Social Security

The enormous expansion of the Social Security system over the last four decades has left the government very heavily involved in determining the savings and insurance of American households. While the growth of Social Security has been very substantial, it has also been gradual; this may explain the lack of focused debate on the pros and cons of government intervention in private saving and insurance decisions. This paper discusses the rationale for government intervention in this area as well as the evidence supporting the need for such intervention. While arguing the case for government provision of Social Security, the paper also points out significant shortcomings in the current system and suggests several needed reforms.     

Constitutional background to the Social Security Act of 1935

In June 1937, the Senate Judiciary Committee reported unfavorably on Roosevelt's Court-packing plan and the bill was effectively killed. In the same month, Justice Van Devanter retired and gave Roosevelt his first opportunity to make an appointment to the Supreme Court. Over the following 6 years, Roosevelt made seven more appointments to the Court, and in the years that followed the Court continued in the direction boldly advanced in the spring of 1937. A residual effect of the taxing-spending construction of the old-age insurance provisions of the Social Security Act of 1935 has been the Court's continued adherence to the view that social security programs consist of separate taxing and spending provisions and are not, constitutionally speaking, social insurance programs. The issue has arisen in both a due process context and an equal protection context. But it is unlikely that the decisions reached in these contexts would have been different had the old-age insurance program been drafted as an earned-benefits program pursuant to the commerce power. Of course, the Court's decisions in the social security cases represented a significant constitutional development in establishing the breadth of Congress' powers to tax and spend for the general welfare. The decisions not only cleared the way for other general welfare programs, but more fundamentally provided the Federal Government with the substantive power and institutional flexibility to respond to the changing needs of the Nation.     

Disabled workers and the indexing of Social Security benefits

We examine how benefit amounts and family income would change in response to changing the Social Security (Old-Age, Survivors, and Disability Insurance, OASDI) benefit indexing scheme. We are interested in a class of reform options designed to gradually slow the growth of benefits across the board. These options include the "price indexing" and "longevity indexing" proposals that have been part of the recent Social Security reform debate in the United States as well as a range of proposals developed in Europe. In this article, we focus on the distributional effects on the disabled. This focus leads to two comparisons. First, we compare disabled-worker beneficiaries to another group that would be affected by the changes, retired-worker beneficiaries. Second, we examine relative changes for particularly vulnerable subgroups of disabled workers. In the empirical analysis, we use two illustrative examples of potential indexing changes: Shifting from wage indexing to price indexing of the initial level of OASDI benefits; and Adjusting the initial benefit level for changes in life expectancy at retirement, that is, longevity indexing. We employ a historical counterfactual simulation to evaluate outcomes that would have resulted from changing the indexing scheme at one particular point in time. The hypothetical implementation period begins with the historical start of the current regime of indexing in 1979 and ends with one of the reference periods of the 1996 Survey of Income and Program Participation (SIPP), a 17-year period. However, we briefly assess the extent to which the results would be applicable to other time horizons. The analysis uses a cross-sectional sample of OASDI beneficiaries from the 1996 SIPP matched to Social Security administrative records. Further, we use total income from the SIPP (as adjusted to correspond to the calculated OASDI benefit amounts) to simulate eligibility for Supplemental Security Income (SSI) and SSI benefit amounts. Our overall findings pertain to three outcomes: (1) effects on OASDI benefits viewed in isolation, (2) the offsetting role of SSI, and (3) the diluting effect of other sources of family income. We find that a broader perspective incorporating all three measures is necessary to obtain an appropriate picture of distributional outcomes. Even though the proposals were designed to have proportional effects, differences between groups--such as disabled and retired workers--can arise from differences in the timing of benefit claiming, mortality, and other factors. Specifically, our cross-sectional estimates suggest that the average change in OASDI benefit levels would be higher for disabled-worker beneficiaries than for retired-worker beneficiaries. These differences are attributable to the fact that a higher proportion of the stock of disabled beneficiaries have been on the Disability Insurance (DI) program rolls for a relatively short period of time and therefore have been affected by the shift in indexing scheme for a longer period of time. These results must be interpreted within the context of the methodology that was used. Further, other methodologies may lead to different results. For example, in previous studies that restricted the sample to a particular birth cohort, a higher proportion of disabled workers than retired workers were observed to have been on the DI program rolls for a relatively long period of time. Longer time on the beneficiary rolls corresponds to less exposure to the new indexing scheme and smaller estimated benefit changes. Thus, the same underlying factor-the timing of benefit claiming-influences both results. When the offsetting role of SSI benefits is also considered, we estimate smaller overall changes, especially for those at the bottom of the income distribution. When OASDI and SSI are considered together, differences in average benefit changes between disabled and retired workers are removed. This is due to a higher rate of SSI program participation among disabled workers than among retired workers. In addition, including SSI substantially reduces the proportion of disabled workers that have large simulated changes in benefit amounts. The estimated effects of changing the indexing scheme are further muted when total family income is considered. This occurs on a roughly equivalent scale for disabled and retired workers. As a result, changing the indexing scheme would produce little change in the status quo differences in poverty status between disabled and retired workers. Finally, we examine the most economically vulnerable subgroups of OASDI beneficiaries. Within the general group of beneficiaries, we find that the most vulnerable would be less affected than average, primarily as a result of the mitigating effect of SSI benefits. Further, within the population of disabled-worker beneficiaries, we examine economically vulnerable subgroups including those in the lowest primary insurance amount quartile, with less than a high school education, with an early onset of disability, or a primary mental impairment. These groups would also be less affected than average.     

Employment of individuals in the Social Security disability programs

The articles in this special issue present findings from research on the employment and work-related activities of individuals receiving benefits through the Social Security Disability Insurance and Supplemental Security Income programs, and on the factors that hinder their efforts to work at levels that lead to exiting the disability rolls. This article introduces the other articles, highlights their important findings, and discusses the implications for ongoing efforts to increase the earnings and self-sufficiency of these beneficiaries, such as the Ticket to Work program and the Benefit Offset National Demonstration.