Changes In Social Security Policy Research Articles

Social security policy changes in 2013 had a positive impact on work participation for people with reduced work capacity: A regional Danish cohort study

BACKGROUND: In Denmark, people with permanent and significantly reduced work capacity can be assigned to a flexi-job (FJ) scheme. In 2013, the social security policy for FJ was reformed to improve employment possibilities for people with reduced work capacity. OBJECTIVE: To describe work participation in the FJ scheme before and after the reform in the North Denmark Region. METHODS: The study population was assigned to the FJ scheme between 2010 and 2015 and followed for two years. Work participation score (WPS) was defined as the number of working weeks divided by the total number of weeks in the FJ scheme. High WPS was defined as above the median. RESULTS: A total of 4,668 people were included in the study. High WPS was significantly influenced by enrolment after policy changes (odds ratio (OR)) 1.60, 95% CI 1.41–1.81), male sex (OR 1.20, CI 1.06–1.36), age above 50 (OR 0.72, CI 0.58–0.90), peripheral living (OR 0.75, CI 0.63–0.90), contact to both somatic and psychiatric healthcare (OR 0.55, CI 0.43–0.71) and a prior strong association to the labour market (OR 5.70, CI 4.40–7.37). CONCLUSIONS: Policy changes increased work participation in the FJ scheme.

Risk-Adjusted Valuation in the Worker’s Economic Decision Making

We suggest an overlapping generations model incorporating the risk-adjusted valuation in a worker’s decision problem. The risk-adjusted probabilities allow risk-averse workers to place more weight on cash flows upon retirement when assessing lifetime income at present value. The risk-adjusted valuation is consistently applied to any non-financial asset, allowing them to be evaluated collectively or separately. We predict capital returns under demographic structure, consumption preference, and social security policy changes.

Effects of social security policy reforms on mental health and inequalities: A systematic review of observational studies in high-income countries.

Evidence increasingly shows that changes to social security policies can affect population mental health. Thus, in the context of rising burden of mental illness, it is of major importance to better understand how expansions and contractions to the social security system may impact on mental health of both adults and children. The aim of this systematic review is to provide a synthesis of observational literature on the effects on mental health and inequalities in mental health of social security reforms. We conducted a systematic review of quantitative observational studies of specific national and regional social security policy changes in high-income countries and summarised the mental health effects of these policies. We searched seven electronic databases, including Medline, PsychInfo, Embase, CINAHL, ASSIA (Proquest), Scopus and Research Papers in Economics from January 1979 to June 2020. We included both objective and subjective mental health and wellbeing measures. The study quality was assessed using the Validity Assessment tool for econometric studies. We identified 13,403 original records, thirty-eight of which were included in the final review. Twenty-one studies evaluated expansionary social security policies and seventeen studies evaluated contractionary policies. Overall, we found that policies that improve social security benefit eligibility/generosity are associated with improvements in mental health, as reported by fourteen of the included studies. Social security policies that reduce eligibility/generosity were related to worse mental health, as reported by eleven studies. Ten studies found no effect for either policies contracting or expanding welfare support. Fourteen studies also evaluated the impact on mental health inequalities and found that contractionary policies tend to increase inequalities whereas expansionary policies have the opposite effect. Changes in social security policies can have significant effects on mental health and health inequalities across different recipient groups. Such health effects should be taken into account when designing future social policy reforms.

Pension plan heterogeneity and retirement behavior

This paper examines the role of Social Security policy changes and the shift in pension plans — from annuity based retirement plans like Defined Benefit to account based plans like Defined Contribution — in explaining the recent increase in labor force participation of older workers. A structural retirement model of consumption, savings, Social Security, health insurance and pension plan heterogeneity is estimated using data from the Health and Retirement Study. The model captures key differences in pension wealth evolution across Defined Benefit and Defined Contribution pension plans and accounts for differences in out-of pocket medical spending across different health insurance groups. As a result, it produces variation in labor supply, both across different pension plan groups and health insurance types at older ages, as observed in the data. After controlling for any changes in the population age distribution and health insurance plans over time, model simulations indicate that changes in pension plan composition can explain 30.5 percent of the increase in labor force participation of the age group 65 to 69. Changes in Social Security normal retirement age and earnings test can each explain 19 and 45% of the increase in labor supply respectively for this age group.

LONGEVITY‐RELATED OPTIONS FOR SOCIAL SECURITY: A MICROSIMULATION APPROACH TO RETIREMENT AGE AND MORTALITY ADJUSTMENTS

We consider the distributional implications of Social Security policy changes in the context of increases in life expectancy and differential mortality. Using a robust microsimulation model, we examine how several options for raising the retirement age, including a scenario that applies a mortality adjustment in combination with such policies, affect different types of individuals and households. Policy changes are simulated for Social Security beneficiaries in 2030 using the Modeling Income in the Near Term (MINT) microsimulation model. The analysis shows that increasing either the age at which individuals receive their full retirement benefit alone or the early eligibility and full retirement ages together result in across-the-board reductions in benefit levels. The policies are projected to result in slightly higher poverty, but the expected rise is sharper among groups known to experience higher rates of mortality, as well as many disadvantaged groups. Analysis of a hypothetical adjustment to offset the historical impacts of differential mortality by lifetime earnings on lifetime benefit receipt, when combined with these retirement age increases, shows varied results. While some groups of individuals experience sharper reductions in median monthly benefits, the adjustment has an offsetting and protective effect for the benefits of disadvantaged groups when combined with options that would raise the retirement age. This combined package of policies, as well as simulations that incorporate a behavioral adjustment in benefit claiming ages, result in an increase of less than one percentage point in the average poverty rate.

Marital Histories, Gender, and Financial Security in Late Mid-Life: Evidence from Four Cohorts in the Health and Retirement Study

Marital status is an established predictor of financial well-being in later life, with continuously married people enjoying considerable economic benefits that accumulate over the life course, contrasting sharply with the economic vulnerabilities faced by divorced, widowed, or never-married individuals. Although prior work suggests that marital histories — including the number and sequencing of past and present unions and dissolutions — have become more complex for more recent cohorts, the economic ramifications of this demographic shift are unclear. Further, how shifts away from continuous marriage will impact women’s financial security in later life is unknown. Using data from the Health and Retirement Study, we examine cohort and gender variation in the relationship between elaborated marital history measures and financial security at ages 51-56, when wealth and earnings are at or near lifetime peaks. We examine three financial measures (negative, zero, and positive wealth; positive wealth levels; earnings) that capture distinct components of financial security as individuals approach retirement.The paper found that: 1.) Middle Baby Boomers born in the mid- to late-1950s differ from older cohorts born in the mid- to late-1930s by both marital history and financial security measures. 2.) Middle Baby Boomers are more likely to have negative wealth (i.e. debt) or zero wealth, and those who have positive wealth have lower levels of wealth. On the other hand, Middle Baby Boomers working full-time have higher earnings than earlier cohorts, especially women. 3.) More recent cohorts are less likely to be continuously married than previous cohorts. 4.) The relationship between marital history and financial security depends on whether wealth or earnings is examined. Specifically, the economic benefits of continuous marriage are more pronounced for wealth than earnings. The policy implications of the findings are: 1.) Social Security policy changes might consider the increasing complexity in marital histories of more recent cohorts. 2.) Greater attention can be paid to two growing segments of adults in late mid-life: those with zero wealth and those in debt, who are approaching retirement in a particularly precarious position. They are more likely to rely on Social Security and may be particularly adversely affected if proposed benefit cuts were enacted.

The effect of social security, health, demography and technology on retirement

This article studies the determinants of the labor force participation of the elderly and investigates the factors that may account for the increase in retirement in the second half of the last century. We develop a lifecycle general equilibrium model with endogenous retirement that embeds Social Security legislation and Medicare. Individuals are ex ante heterogeneous with respect to their preferences for leisure and face uncertainty about labor productivity, health status and out-of-pocket medical expenses. The model is calibrated to the U.S. economy in 2000 and is able to reproduce very closely the retirement behavior of the American population. It reproduces the peaks in the distribution of Social Security applications at ages 62 and 65 and the observed facts that low earners and unhealthy individuals retire earlier. It also matches very closely the increase in retirement from 1950 to 2000. Changes in Social Security policy – which became much more generous – and the introduction of Medicare account for most of the expansion of retirement. In contrast, the isolated impact of the increase in longevity was a delaying of retirement.

Modeling Income in the Near Term: Projections of Retirement Income through 2020 for the 1931-60 Birth Cohorts

This report details the development of a third version of MINT (Modeling Income in the Near Term), a tool for simulating the retirement incomes of members of the Baby Boom and neighboring cohorts. MINT3 can produce projections of economic and demographic characteristics in the year 2020, at the time of retirement, and for other years and ages. It can be used both to construct a baseline using alternative economic and demographic assumptions and to analyze the distributional consequences of a variety of Social Security policy changes.

Policy effects in hyperbolic vs. exponential models of consumption and retirement

This paper constructs a structural retirement model with hyperbolic preferences and uses it to estimate the effect of several potential Social Security policy changes. Estimated effects of policies are compared using two models, one with hyperbolic preferences and one with standard exponential preferences. Sophisticated hyperbolic discounters may accumulate substantial amounts of wealth for retirement. We find it is frequently difficult to distinguish empirically between models with the two types of preferences on the basis of asset accumulation paths or consumption paths around the period of retirement. Simulations suggest that, despite the much higher initial time preference rate, individuals with hyperbolic preferences may actually value a real annuity more than individuals with exponential preferences who have accumulated roughly equal amounts of assets. This appears to be especially true for individuals with relatively high time preference rates or who have low assets for whatever reason. This affects the tradeoff between current benefits and future benefits on which many of the retirement incentives of the Social Security system rest.Simulations involving increasing the early entitlement age and increasing the delayed retirement credit do not show a great deal of difference whether exponential or hyperbolic preferences are used, but simulations for eliminating the earnings test show a non-trivially greater effect when exponential preferences are used.

Restructuring and Social Safety Nets in Russia and Ukraine - Social Security Influence on Labor Mobility: Possible Opportunities and Challenges

The paper discusses the issue of labor force mobility in a broad sense, and analyses how changes in social security policy and the structure of the social safety net (SSN) affects different aspects of labor force mobility. The text is structured as follows: Introduction, then follows Chapter 2, which provides an overview of the labor market and social safety net developments in Russian and Ukraine over the last decade, as well as discusses common features of these countries. The Chapter 3 establishes theoretical models for different aspects of labor force mobility, discusses the availability of data on Russia and Ukraine to test these models, and provides a statistical analysis of the data. The Chapter 4 discusses results of the statistical analysis. The final chapter discusses policy conclusions that can be derived from comparison of the effect of the SSN on labor mobility in these two countries, and extends them to all countries in transition.

Social Security and Marginal Returns to Work Near Retirement

Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper calculates the marginal returns to work near retirement, as measured by the increase in benefits associated with an additional year of employment at the end of an individual's work life. With exceptions for certain population subgroups, the analysis finds that marginal returns on Social Security taxes paid near retirement are generally low. The paper also tests the effects on marginal returns of a variety of potential Social Security policy changes designed to improve incentives to work.

Inequality and social security reforms

This paper develops a quantitative Markovian overlapping generations model with altruistic individuals and incomplete financial markets in order to analyze the long-run distributional implications of two hypothetical public social security policy changes, made in response to impending future demographic shifts. The two policy changes considered are first, raising the tax rate while keeping the replacement rate constant and second, keeping the tax rate constant while lowering the replacement rate. Whereas this latter policy is detrimental to the relative situation of the retirees, the huge financial heterogeneity in the first scenario explains why the increase in the proportional labor tax is relatively badly absorbed by low-productivity workers, leading to an increase in welfare inequality. We show that the very popular idea that a more funded system would ineluctably lead to more inequalities in well-being can be justified only by focusing on the inequality of positions in case of general equilibrium.

Social Security Reform

Despite recent economic gains for women, a substantial gender gap in financial security during old age remains, making women more dependent than men upon Social Security. Social Security plays an important role in providing for women's economic security. The implications for women of several proposed changes in Social Security policy, including the call for the partial privatization of Social Security via the introduction of individual accounts, are analyzed. Many of the proposals would have the effect of asking women, particularly low-income women, to shoulder a disproportionate share of the risks and burdens associated with the changes.

Social Security Reform: Implications for Women

Despite recent economic gains for women, a substantial gender gap in financial security during old age remains, making women more dependent than men upon Social Security. This paper discusses the important role that Social Security plays in providing for women's economic security. It also analyzes the implications for women of several proposed changes in Social Security policy, including the call for the partial privatization of Social Security via the introduction of individual accounts. Many of the proposals would have the effect of asking women, particularly low-income women, to shoulder a disproportionate share of the risks and burdens associated with the changes.

The bane and benefits of computers in Australia’s Department of Social Security

Attempts to establish the extent to which the use of computers in Australia’s Department of Social Security (DSS) has facilitated changes in social security policy and its administration. Bases findings on case studies relating to two new DSS policies, supplemented with documentary evidence. Identifies that computers are used in the DSS for six main purposes ‐ administering, automating, protecting, monitoring and evaluating policy, as well as for modelling future policy options. Identifies that, instead of increasing efficiency in administration, computers have simply increased productivity by enabling administrative practices to be extended into new areas; observes an emerging computer‐dependent culture dominated by quantitative (rather than qualitative) practices. Establishes that the flexibility offered by computer technology has also contributed to the introduction of more complex social security policies. Concludes that computer technology has contributed to the formulation and administration of social security policies.