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Newsletter
Reforming Social Security to Save Social Security
The biggest social safety net in the United States is the Social Security program, which provides retirement benefits totaling almost $900 billion to 54 million individuals. It is a concern for all but the wealthiest, then, that Social Security faces insolvency: The U.S. Social Security Administration predicts that in 2020, the costs of the program will exceed its income. This suggests it is critical for policymakers to evaluate whether there is a path for social security reform that will improve people?s welfare both before and after retirement while restoring the program?s solvency.
Working Paper
Flexible Retirement and Optimal Taxation
This paper studies optimal insurance against private idiosyncratic shocks in a life-cycle model with intensive labor supply and endogenous retirement. In this environment, the optimal labor tax is hump-shaped in age: insurance benefits of taxation push for increasing-in-age taxes while rising labor supply elasticities and optimal late retirement of highly productive workers push for lowering taxes for old workers. In calibrated numerical simulations, the optimum achieves sizable welfare gains that age-dependent taxes do not deliver under the status quo US Social Security. Nevertheless, an ...