Reductions in the implicit taxation of Social Security benefits from reducing or eliminating the Retirement Earnings Test (RET) are an appealing – and in many cases successful – means of encouraging labor supply of older individuals receiving benefits. The downside, however, is that the same...

The Australian age pension is noncontributory, funded through general tax revenues and means tested against pensioners, private resources, including labour earnings. This paper constructs an overlapping generations (OLG) model of the Australian economy to examine the economy wide implications of...

Many job-losers suffer large and persistent losses in earnings capacity. For displaced workers who are age-eligible, one reaction to these losses is to begin claiming Social Security retirement benefits. We use administrative earnings records from the Social Security Administration's Continuous...

Social security plays an essential role in an economy, but if designed incorrectly can distort the labor supply and savings behavior of individuals in the economy. We explore how well the Australian means-tested pension system provides social insurance by calculating possible welfare gains from...

This paper develops a method that improves researchers' ability to account for behavioral responses to policy change in microsimulation models. Current microsimulation models are relatively simple, in part because of the technical difficulty of accounting for unobserved heterogeneity. This is...

This study analyzes the relative performance in terms of welfare of the current U.S. PAYG system compared to an array of cost equivalent alternative specifications of means-tested pension programs. We conduct our analysis under two different settings. While in the first setting, individuals have...

Chile’s innovative privatized pension system has been lauded as possible model for Social Security system overhauls in other countries, yet it has also been critiqued for not including a strong safety net for the uncovered sector. In response, the Bachelet government in 2008 implemented...

While privatizing Social Security can improve labor supply incentives, it can also reduce risk sharing. We simulate a 50-percent privatization using an overlapping-generations model where heterogeneous agents with elastic labor supply face idiosyncratic earnings shocks and longevity uncertainty....

Social Security reform proposals are often presented in terms of their differential impacts on hypothetical or 'example' workers. Our work explores how different benchmarks produce different replacement rate outcomes. We use the Health and Retirement Study (HRS) to evaluate how Social Security...

While privatizing Social Security can improve labor supply incentives, it can also reduce risk sharing when households face uninsurable risks. We simulate a stylized 50-percent privatization using an overlapping-generations model where heterogeneous agents with elastic labor supply face...