IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/6897.html
   My bibliography  Save this book chapter

The Genesis and Evolution of Social Security

In: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century

Author

Listed:
  • Jeffrey A. Miron
  • David N. Weil

Abstract

We examine the creation of Social Security during the Great Depression, and how it has evolved since, asking in particular to what extent the program as it exists today is the same as that created in 1935 and 1939. We find that there has been surprising continuity. Much of the program's growth was built in from its inception. The replacement rate and the ratio of benefits to payrolls are today roughly at the levels designed into the original legislation. Payroll tax rates today are higher than had been planned, in part because of the failure to accumulate a trust fund during the program's early years. The change in the ratio of contributors to beneficiaries which has taken place over the last 60 years was fully anticipated. The most dramatic changes in Social Security's functioning have come not from legislation, but from changes in the environment in which the program operates. Before the Depression, retirement was unlikely and often involuntary. Higher life expectancy, lower labor force participation, and better health have undermined Social Security's original purpose, which was as a form of insurance. We also find that the Depression itself had surprisingly little influence on the design chosen for Social Security.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Jeffrey A. Miron & David N. Weil, 1998. "The Genesis and Evolution of Social Security," NBER Chapters, in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 297-322, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:6897
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c6897.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    2. Ransom, Roger L. & Sutch, Richard, 1986. "The Labor of Older Americans: Retirement of Men On and Off the Job, 1870–1937," The Journal of Economic History, Cambridge University Press, vol. 46(1), pages 1-30, March.
    3. Yukio Noguchi & David A. Wise, 1994. "Introduction to "Aging in the United States and Japan: Economic Trends"," NBER Chapters, in: Aging in the United States and Japan: Economic Trends, pages 1-6, National Bureau of Economic Research, Inc.
    4. Weaver, Carolyn L., 1983. "On the lack of a political market for compulsory old-age insurance prior to the great depression: Insights from economic theories of government," Explorations in Economic History, Elsevier, vol. 20(3), pages 294-328, July.
    5. Robin L. Lumsdaine & David A. Wise, 1994. "Aging and Labor Force Participation: A Review of Trends and Explanations," NBER Chapters, in: Aging in the United States and Japan: Economic Trends, pages 7-42, National Bureau of Economic Research, Inc.
    6. Carter, Susan B. & Sutch, Richard, 1996. "Myth of the Industrial Scrap Heap: A Revisionist View of Turn-of-the-Century American Retirement," The Journal of Economic History, Cambridge University Press, vol. 56(1), pages 5-38, March.
    7. Carolyn L. Weaver, 1987. "Support of the Elderly before the Depression: Individual and Collective Arrangements," Cato Journal, Cato Journal, Cato Institute, vol. 7(2), pages 503-525, Fall.
    8. Yukio Noguchi & David A. Wise, 1994. "Aging in the United States and Japan: Economic Trends," NBER Books, National Bureau of Economic Research, Inc, number nogu94-1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John Geanakoplos & Olivia S. Mitchell & Stephen P. Zeldes, "undated". "Social Security Money's Worth," Pension Research Council Working Papers 97-20, Wharton School Pension Research Council, University of Pennsylvania.
    2. Elizabeth Caucutt & Thomas Cooley & Nezih Guner, 2013. "The farm, the city, and the emergence of social security," Journal of Economic Growth, Springer, vol. 18(1), pages 1-32, March.
    3. Omer Ali Ibrahim & Sonal Devesh, 2020. "Socio-economic Dynamics of Social Insurance in Oman: A Model Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 10(2), pages 37-47.
    4. VANNESTE, Jacques & ZHANG, Ying, 2012. "The impact of government expenditure on prepayment for health services: Evidence from cointegration analysis in heterogeneous panel data," Working Papers 2012029, University of Antwerp, Faculty of Business and Economics.
    5. Casey B. Mulligan, 2000. "Induced Retirement, Social Security, and the Pyramid Mirage," NBER Working Papers 7679, National Bureau of Economic Research, Inc.
    6. Holzmann, Robert & Pouget, Yann & Vodopivec, Milan & Weber, Michael, 2011. "Severance Pay Programs around the World: History, Rationale, Status, and Reforms," IZA Discussion Papers 5731, Institute of Labor Economics (IZA).
    7. Shiller, Robert J., 1999. "Social security and institutions for intergenerational, intragenerational, and international risk-sharing," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 165-204, June.
    8. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Social security in theory and practice (I): Facts and political theories," Economics Working Papers 384, Department of Economics and Business, Universitat Pompeu Fabra.
    9. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    10. Craig Broderick, 2001. "Capital allocation for operational risk: securities firms," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
    11. Soares, Jorge, 2005. "Public education reform: Community or national funding of education?," Journal of Monetary Economics, Elsevier, vol. 52(3), pages 669-697, April.
    12. Michael Dotsey, 1997. "Investing in equities: can it help social security?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 49-70.
    13. Jorge Soares, 2006. "A dynamic general equilibrium analysis of the political economy of public education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 367-389, June.
    14. Pinotti Paolo, 2009. "Financial Development and Pay-As-You-Go Social Security," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-21, March.
    15. Cutler, David & Johnson, Richard, 2004. "The Birth and Growth of the Social Insurance State: Explaining Old-Age and Medical Insurance Across Countries," Scholarly Articles 2643658, Harvard University Department of Economics.
    16. David N. Weil, 2001. "Demographic shocks: the view from history: discussion," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 46.
    17. David M. Cutler & Richard Johnson, 2004. "The Birth and Growth of the Social Insurance State: Explaining Old Age and Medical Insurance Across Countries," Public Choice, Springer, vol. 120(1_2), pages 87-121, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sebnem Kalemli-Ozcan & David Weil, 2010. "Mortality change, the uncertainty effect, and retirement," Journal of Economic Growth, Springer, vol. 15(1), pages 65-91, March.
    2. Robalino, David A. & Zylberstajn, Eduardo & Zylberstajn, Helio & Afonso, Luis Eduardo, 2008. "An ex-ante evaluation of the impact of social insurance policies on labor supply in Brazil : the case for explicit over implicit redistribution," Social Protection Discussion Papers and Notes 90342, The World Bank.
    3. Coile Courtney, 2004. "Retirement Incentives and Couples' Retirement Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-30, July.
    4. Sebnem Kalemli-Ozcan & David Weil, 2010. "Mortality change, the uncertainty effect, and retirement," Journal of Economic Growth, Springer, vol. 15(1), pages 65-91, March.
    5. Takatoshi Ito & Andrew Rose, 2010. "Introduction to "The Economic Consequences of Demographic Change in East Asia"," NBER Chapters, in: The Economic Consequences of Demographic Change in East Asia, pages 1-15, National Bureau of Economic Research, Inc.
    6. Livio Di Matteo, 2008. "Wealth accumulation motives: evidence from the probate records of Ontario, 1892 and 1902," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 2(2), pages 143-171, July.
    7. Lee, Chulhee, 1999. "Farm Value and Retirement of Farm Owners in Early-Twentieth-Century America," Explorations in Economic History, Elsevier, vol. 36(4), pages 387-408, October.
    8. Duryea, Suzanne & Székely, Miguel, 1998. "Labor Markets in Latin America: A Supply-Side Story," IDB Publications (Working Papers) 1289, Inter-American Development Bank.
    9. Baker, Michael & Benjamin, Dwayne, 1999. "Early Retirement Provisions and the Labor Force Behavior of Older Men: Evidence from Canada," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 724-756, October.
    10. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    11. Takatotshi Ito, 1996. "Japan and the Asian Economies: A 'Miracle' in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(2), pages 205-272.
    12. Martin S. Feldstein & Jeffrey B. Liebman, 2002. "The Distributional Effects of an Investment-Based Social Security System," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 263-326, National Bureau of Economic Research, Inc.
    13. Leers, T. & Meijdam, A.C. & Verbon, H.A.A., 2001. "The Politics of Pension Reform Under Population Ageing," Other publications TiSEM bb03e411-061a-48e2-8a63-8, Tilburg University, School of Economics and Management.
    14. Laurence J. Kotlikoff & David A. Wise, 1988. "Pension Backloading, Wage Taxes, and Work Disincentives," NBER Chapters, in: Tax Policy and the Economy: Volume 2, pages 161-196, National Bureau of Economic Research, Inc.
    15. Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters, in: Privatizing Social Security, pages 215-264, National Bureau of Economic Research, Inc.
    16. C. Lee, 1998. "Life Cycle Savings in the United States, 1900-1990," CPE working papers 0014, University of Chicago - Centre for Population Economics.
    17. Hassler, J. & Lindbeck, A., 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Papers 631, Stockholm - International Economic Studies.
    18. Elmendorf, Douglas W. & Gregory Mankiw, N., 1999. "Government debt," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 25, pages 1615-1669, Elsevier.
    19. van Groezen, B.J.A.M. & Meijdam, A.C. & Verbon, H.A.A., 2002. "Social Security Reform and Population Ageing in a Two-Sector Growth Model," Discussion Paper 2002-25, Tilburg University, Center for Economic Research.
    20. András Simonovits, 2000. "Partial privatization of a pension system: lessons from Hungary," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(4), pages 519-529.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:6897. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.