Will social security survive the baby boom?

Cooley, Thomas F.; Soares, Jorge

doi:10.1016/s0167-2231(96)00019-x

Cited by 43 publications

(16 citation statements)

References 6 publications

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“…In the United States social security was introduced in 1935 and the size of the program was expanded signi…cantly in the 1940's and 1960's. There is a signi…cant literature on the political economy of social security systems (Cooley and Soares 1996, Conesa and Krueger 1999, Galasso 1999, Boldrin and Rustichini 2000, and Gonzales-Eiras and Niepelt 2005 e.g.) that analyses the political sustainability of PAYG social security systems.…”

Section: Introductionmentioning

confidence: 99%

The farm, the city, and the emergence of social security

2012

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During the period from 1880 to 1950 publicly managed retirement security programs became an important part of the social fabric in most advanced economies. In this paper we study the social, demographic and economic origins of social security. We describe a model economy in which demographics, technology, and social security are linked together. We study an economy with two locations (sectors), the farm (agricultural) and the city (industrial). The decision to migrate from rural to urban locations is endogenous and linked to productivity di¤erences between the two locations and survival probabilities. Furthermore, the level of social security is determined by majority voting. We show that a calibrated version of this economy is consistent with the historical transformation in the United States. Initially a majority of voters live on the farm and do not want to implement social security. Once a majority of the voters move to the city, the median voter prefers a positive social security tax, and social security emerges.

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Section: Introductionmentioning

confidence: 99%

The farm, the city, and the emergence of social security

2012

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“…They assume constant population growth. Cooley and Soares (1996) study the design and implementation of a payas-you-go social insurance system as a problem in political economy. They are particularly interested in the sustainability of such a system in a world with stochastic population growth.…”

Section: Introductionmentioning

confidence: 99%

Projected U.S. Demographics and Social Security

Nardi

İmrohoroğlu

Sargent

1999

Review of Economic Dynamics

218

149

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Without policy reforms, the aging of the U.S. population is likely to increase the burden of the currently unfunded social security and medicare systems. In this paper we build an applied general equilibrium model and incorporate the population projections made by the Social Security Administration (SSA) to evaluate the macroeconomic and welfare implications of alternative fiscal responses to the retirement of the baby-boomers. Our calculation suggest that it will be costly to maintain the benefits at the levels now promised because the increases in distortionary taxes required to finance those benefits will reduce private saving and labor supply. We also find that the "accounting calculations" made by SSA underestimate the required fiscal adjustments. Finally, our results confirm that policies with similar long-run characteristics have very different transitional implications about the distribution of welfare across generations. (Copyright: Elsevier)

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“…increase dramatically. In Cooley and Soares 1996 we considered the effect of a baby boom on the sustainability of pay-as-you-go social insurance. We showed that, if people could abandon the system immediately, then the baby boom would lead them to do so.…”

Section: Introductionmentioning

confidence: 99%