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Social Security reform: three Rawlsian options

Author

Listed:
  • Erin Cottle Hunt

    (Lafayette College)

  • Frank N. Caliendo

    (Utah State University)

Abstract

To maintain long-run solvency in light of changing demographics, the US Social Security system needs to be reformed. We present three reform options that protect the retirement benefits of the economically vulnerable while also balancing the Social Security budget. We refer to these three options as Rawlsian reforms because, with each reform option, the Social Security benefits of those at the low end of the income distribution are left intact. Two of our reforms break the link between the benefit cap and the tax cap by lowering the benefit cap. We explore the effect of each reform on ex-ante expected utility, the distribution of private savings, and the distribution of lifetime income in a life-cycle model.

Suggested Citation

  • Erin Cottle Hunt & Frank N. Caliendo, 2020. "Social Security reform: three Rawlsian options," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(6), pages 1582-1607, December.
    • Handle: RePEc:kap:itaxpf:v:27:y:2020:i:6:d:10.1007_s10797-020-09607-4
    DOI: 10.1007/s10797-020-09607-4
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    Cited by:

    1. John Bailey Jones & Yue Li, 2023. "Social Security Reform with Heterogeneous Mortality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 48, pages 320-344, April.
    2. Eytan Sheshinski & Frank N. Caliendo, 2021. "Social Security and the increasing longevity gap," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 29-52, February.
    3. Erin Cottle Hunt & Frank N. Caliendo, 2022. "Social security and risk sharing: A survey of four decades of economic analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1591-1609, December.
    4. Erin Cottle Hunt & Frank N. Caliendo, 2023. "Social security and risk sharing: the role of economic mobility across generations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(5), pages 1374-1407, October.
    5. John Bailey Jones & Yue Li, 2023. "Social Security Reform with Heterogeneous Mortality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 48, pages 320-344, April.

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    More about this item

    Keywords

    Social Security reform; Inequality; Rawlsian welfare;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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