List of References
Day, Jennifer Cheeseman (1996), “Population Projections of the United States by Age, Sex, Race and Hispanic Origin: 1995 to 2050,” U.S. Bureau of the Census, Current Population Reports, pp 25–1130, U.S., 1996.
Feldstein, Martin S. (1974), “Social Security, Induced Retirement, and Aggregate Capital Accumulation,” Journal of Political Economy, Vol. 82, No.5.
Feldstein, Martin S., (1996), “The Missing Piece in Policy Analysis: Social Security Reform,” National Bureau of Economic Research Working Paper 5413, 1996.
Gramlich, Edward M. (1996), “Different Approaches for Dealing with Social Security,” Journal of Economic Perspectives, Vol. 10, No. 3, 1996.
Social Security Administration Advisory Council (1997), Findings, Recommendations and Statements, U.S. Government Printing Office, Washington D.C., 1997.
Social Security Administration (1996), Fast Facts and Figures About Social Security, U.S. Government Printing Office, Washington D.C., 1996.
Valdivia, Victor H. (1997), “The Insurance Role of Social Security,” forthcoming Working Paper of the International Monetary Fund.
Prepared by Victor Valdivia. A complete description of the model and the simulation results is given in Valdivia (1997).
In the remainder of this paper, Social Security refers only to Old-Age and Survivors Insurance. The disability and hospital insurance parts of the Social Security system are not considered.
In this model, parents care about their offspring and bequeath wealth to them. Most other life-cycle models do not have these features.
Adverse selection occurs when only those individuals who have good reason to believe that they will live for a long time buy annuities The cost of annuities is therefore high, and many people cannot afford them; see Schulz (1995).
The utility measure reflects the value of leisure. The use of average utility as an economy-wide welfare measure assigns equal weight to all individuals.
Social Security also has the advantage over traditional private pensions in the United States in that it is fully portable from one job to another, and protects workers who change jobs before they are vested in private pensions plans.
The retirement age is already scheduled to rise gradually from 65 to 67 between the years 2000 and 2022.
The insurance value of the proposed reform plans is not fully examined explicitly. For example, the insurance value of the two tiers in the PSA plan was not considered in the model.