Research and Analysis Alphabetically

The Accuracy of Survey-Reported Marital Status: Evidence from Survey Records Matched to Social Security Records

Many researchers have concluded that, in surveys, divorced persons often fail to report accurate marital information. In this paper, I revisit this issue using a new source of data—surveys exactly matched to Social Security data. I find that divorced persons frequently misreport their marital status, but there is evidence that the misreporting is unintentional. A discussion of possible improvements in surveys is presented. Implications for the study of differential mortality and the study of poverty among aged women are discussed.

Addressing the Challenges Facing SSA's Disability Programs

An outline of the current initiatives—for example, the implementation of the Ticket to Work program and various demonstration projects designed to promote work resumption—undertaken to address the challenges facing SSA's disability programs. The article also contains a summary of the agency's efforts to enhance the efficiency of its administration of the disability programs, including the establishment of an eDib electronic disability folder and the creation of a workgroup to consider ideas for simplifying the SSI program.

Adjusted Estimates of the Size Distribution of Family Money Income for 1972

It is well-known that for most purposes income size distribution data collected in household surveys are far from ideal. The problems with those data can be separated into two types: the data items that are collected, and the accuracy of the data collected. Usually, although there are important exceptions, the income data collected are confined to cash income before taxes, thus ignoring the effects of both taxes and noncash income of all types. Also, the income estimates usually are for one year, which often is not the best accounting period for analysis. Furthermore, there usually is a lack of adequate detail by income type, and the data ordinarily are not sufficiently detailed to adjust for changes in the composition of the family unit during the income accounting period.

The Advantages and Disadvantages of Different Social Welfare Strategies

Age, Work and Capacity Devaluation

To be awarded Disability Insurance benefits, an individual must have an objectively determinable, severe medical condition or impairment that, according to Social Security regulations, is serious enough that it can be presumed to keep the individual from working. We know, however, that some people who have medical conditions serious enough to qualify them for disability benefits are nevertheless able to continue working, while others who consider themselves unable to work do not have a serious enough impairment to qualify them for benefits. Whether or not a seriously impaired individual files for Social Security Disability Insurance benefits (SSDI) will depend, in part, on his or her own self-assessment of his ability to work, i.e., whether he considers himself to be severely disabled. This self-assessment depends upon many factors in addition to the actual severity of the individual's medical condition. These factors, therefore, become important elements in the decision to apply for SSDI benefits. This report examines how the relationship between measures of actual individual functional capacity and individual self-assessments of work capacity vary by age and other important job-related attributes.

Alternative Estimates of Economic Well-Being by Age Using Data on Wealth and Income

Most analyses of economic status use only income as the measure of resources. It is clear, however, that wealth also plays an important role in economic well-being. The existence of both income and asset tests for eligibility purposes in several government transfer programs (e.g., Supplemental Security Income, Aid to Families with Dependent Children, food stamps) suggests the importance of both wealth and income. Units of the same age, income, and needs are not equally well off if they have different amounts of wealth. A fully satisfactory way of taking differences in wealth into account in a combined income-wealth measure is not available. Particularly controversial is the comparison of different age groups when such measures are used. This exploratory paper examines the use of income-wealth measures for the analysis of the distribution of economic well-being for age groups in the current period.

Analysis of Social Security Proposals Intended to Help Women: Preliminary Results

One aspect of the current debate about changing the Social Security program concerns how new rules might affect elderly women, many of whom have low income. This paper examines three possible changes: (1) a reduction in spousal benefits combined with a change in the computation of the survivor benefit, (2) a redefined minimum benefit, and (3) a 5 percent increase in benefits for persons aged 80 or older. The paper assesses the cost, distributional consequences, and antipoverty impact of each option.

Analysis of the Advisory Council's Proposal to Tax One-Half of Social Security Benefits

This paper presents analysis of the distributional and other effects of a change from the existing income tax exclusion of Social Security benefits to the proposed 50 percent inclusion. In emphasizing the differences between these two policies, very limited attention will be given to other policy alternatives.

Annual Wage Trends for Supplemental Security Income Recipients

As a means-tested program, the Supplemental Security Income program considers a recipient's income from wages and other sources when determining eligibility and the monthly benefit amount. This study examines annual earnings for a sample of Supplemental Security Income recipients and, in the case of child recipients, their spouses and parents to evaluate the feasibility of using average annual wages in place of monthly wages when determining benefit amounts. The data show substantial variation in earnings from one year to the next. The results do not point to any clear distinctions in wage patterns among recipients or ineligible spouses and parents that would make any one group a better candidate for estimating and verifying wages on an annual basis.

Application of Experimental Poverty Measures to the Aged

This article examines poverty among persons aged 65 or older under experimental measures, which are based on a 1995 report released by the National Academy of Sciences. When compared with the official measure, the experimental measure produces higher poverty rates for all groups and narrower differences in poverty rates across groups.

Argentina's Pensions System

An Assessment of the Economic Status of the Aged

This paper discusses what is known about the economic status of the aged. Numerous complexities involved in the assessment of the economic status of the aged are discussed. Compared with most other recent assessments, this study shows a less favorable status for the aged relative to other age groups. The focus is on an examination of detailed age groups, rather than summary aged and nonaged groups, thus providing a more complete picture of age differences. More than most other assessments, this study stresses uncertainty about the relative status of the aged and emphasizes what we do not know. The need for better adjustments for differences in needs among age and other subgroups of the population is stressed. The need for consistency between the definition of resources and the specification of needs is also emphasized. The vulnerability of the aged to economic risks is discussed.

Attrition in the New Beneficiary Survey and Followup, and Its Correlates

In this article we explore the extent of and reasons for attrition in the New Beneficiary Survey (NBS) between the first interview in 1982 and the followup interview in 1991. We examine a variety of potential determinants of attrition, separating the probability of attrition due to death from a refusal to be interviewed. Because the NBS sample is drawn from and linked to Social Security administrative records, information on mortality as a cause of attrition is exact. Hence, we are able to examine differences in the patterns and predictors of attrition due to these two causes of attrition and differences between attrition among retired and disabled workers.

Beneficiaries Affected by the Annual Earnings Test, 1989

The earnings test of the Social Security Act has, since it s introduction in 1939, been one of the more controversial provisions of the Act. The controversy has centered on the role that the test plays on the retirement decision and the issue of whether or not Social Securiyt benefits become an "earned right" after an individual reaches retirement age and therefore should be paid regardless of subsequent earnings.

This article presents a history of the earnings test and how it has evolved into the test in effect today. It presents demographic data for the 1,241,000 beneficiaries who in 1989 had at least $1 in benefits withheld as a result of the test. Of this total, 926,000 were retired-worker beneficiaries. The other persons affeted by the test were dependents and survivors who had benefits offset due to their own earnings. Collectively, these persons had over $5 billion in benefits withheld. In addition to these persons, there is a potentially large gorup of individuals who never filed for benefits because they knew that their benefits would be withheld.

Benefit Adequacy Among Elderly Social Security Retired-Worker Beneficiaries and the SSI Federal Benefit Rate

The federal benefit rate (FBR) of the Supplemental Security Income program provides an inflation-indexed income guarantee for aged and disabled people with low assets. Some consider the FBR as an attractive measure of Social Security benefit adequacy. Others propose the FBR as an administratively simple, well-targeted minimum Social Security benefit. However, these claims have not been empirically tested. Using microdata from the Survey of Income and Program Participation, this article finds that the FBR is an imprecise measure of benefit adequacy; it incorrectly identifies as economically vulnerable many who are not poor, and disregards some who are poor. The reason for this is that the FBR-level benefit threshold of adequacy considers the Social Security benefit in isolation and ignores the family consumption unit. The FBR would provide an administratively simple but poorly targeted foundation for a minimum Social Security benefit. The empirical estimates quantify the substantial tradeoffs between administrative simplicity and target effectiveness.

Benefit Adequacy in State Workers' Compensation Programs

This article summarizes several different methods used to measure the adequacy of wage replacement in state workers' compensation systems in the United States. Empirical research casts serious doubt on benefit adequacy, especially in the case of more serious disabilities.

[Errata: The electronic versions of this article that were originally posted contained incorrect labels on the lines in Chart 3. The labels have been updated in the electronic versions and are correct in the print publication.]

A Benefit of One's Own: Older Women's Entitlement to Social Security Retirement

Using data from the Health and Retirement Study (HRS) and linked administrative records, we explore differences in old-age benefits between men and women attributable to differences in length of work life and pay. We find that most women are fully insured for Social Security purposes, but those who are not would have to work substantially more to become eligible. Among those who are eligible, additional work would translate into only slightly higher benefits.

Benefits and Beneficiaries Under Public Employee Retirement Systems, Fiscal Year 1991

Bipartisan Commission on Entitlement and Tax Reform

The Canada Pension Plan's Experience with Investing Its Portfolio in Equities

This article examines the experience of the Canada Pension Plan (CPP) in investing its surplus funds in equities. The CPP investment policy is viewed by some experts as a possible model for increasing the investment income of Social Security. The article discusses the key features of this policy, its implementation, and results to date.

Case Management at Work for SSA Disability Beneficiaries: Process Results of the Project NetWork Return-to-Work Demonstration

This article presents the results of the process analysis of the evaluation of the Project NetWork demonstration, a Federal demonstration undertaken by the Social Security Administration (SSA) in 1991 to test alternative methods of providing rehabilitation and employment services to SSA's Disability Insurance beneficiaries and Supplemental Security Income disabled and blind applicants and recipients. The major findings are: (1) from an operational standpoint, it is feasible to expand access to vocational rehabilitation (VR) services to a broad spectrum of SSA beneficiaries, and (2) roughly similar results are achieved, in terms of client intake and provision of services, when case management services are provided by SSA staff, contracted out to State VR agencies, or contracted with private VR providers. Later evaluation reports will trace demonstration impacts on earnings and disability benefits and report the overall benefits and costs of return-to-work services for this population.

Cash Benefits For Short-Term Sickness, 1970–94

A Causative Matrix Approach to Mobility Studies

Markov models have been widely used for the analysis and prediction of shifts in population distribution over time. The point of departure for most of these analyses has been the finite state, time stationary Markov chain. The usual Markov chain model has, however, been shown to be inadequate for most social science applications.

This paper presents a particular kind of discrete time nonstationary Markov chain. Such chains will be built using a mathematical quantity called a causative matrix.

The Challenge of the 21st Century: Innovating and Adapting Social Security Systems to Economic, Social, and Demographic Changes in the English-Speaking Americas

The Social Security Programs in the United States are complex and have evolved over a long span of years. However, it is possible to categorize much of this experience into two different eras in whcih Social Security functioned in a distinctive environment, and a thrid era that is now beginning. The middle third of this century was an "age of invention," in which the programs grew rapidly under favorable social and economic conditions. Since then, the programs have experienced an "age of accommodation," in which growing financial constraints have permitte donly limited changes in the program. We can look forward to an "age of maturation" in the decades to come, as most persons reaching reitrement will have been covered by Social Security during their entire working careers. The declining ratio of workers to benefiticaries and a wide range of demographic and social changes will present significatn challenges. The Social Security programs must change considerably to respond to the demands of a new era, and vigorous efforts to do so are underway.

Changes in the Demographic and Economic Characteristics of SSI and DI Beneficiaries Between 1984 and 1999

During the past 20 years, legislative and judical actions have affected Supplemental Security Income and Disability Insurance beneficiaries. This article compares important changes in demographics, income sources and amounts, and poverty status of beneficiaries of both programs between 1984 and 1999, using data from the Survey of Income and Program Participation matched to administrative data from the Social Security Administration. The average age of both groups has decreased, while their education levels increased. In 1999, Disability Insurance beneficiaries and their families relied less on Social Security, while their poverty rate remained fairly constant. The Supplemental Security Income population had a lower poverty rate, while beneficiaries were slightly more reliant on Social Security for personal income.

Changes in the Incomes of Age Groups, 1984–1989

In recent years there has been great interest in the economic status of the aged, especially in connection with the debates about the appropriate level of Social Security benefits and Medicare coverage and financing. The economic status of the aged relative to other age groups has been of particular interest in these debates. This paper examines changes in the before-tax cash income of the aged and of other age groups from 1984 to 1989. Earlier research found that the real income of the aged rose substantially, both absolutely and relative to the income of the nonaged, from about 1970 to the mid-1980s. It is shown here that from 1984 to 1989 the real income of the aged rose slowly, and fell slightly relative to the income of the nonaged. The different rates of income growth for different aged groups are explored in this paper, with the emphasis on differences between the aged and nonaged. This paper also serves as an update of an earlier paper that contained estimates for the 1967–1984 period. The estimates in this paper generally are consistent with those presented in the earlier article.

The Changing Impact of Social Security on Retirement Income in the United States

This article assesses the role of Social Security and Supplemental Security Income (SSI) in the economic well-being of baby-boomer retirees and their predecessors. The results suggest that, similar to current retirees, Social Security will account for about two-fifths of projected income for baby-boomer retirees. On average, SSI will contribute almost nothing to total income and will be received by fewer baby-boomer retirees than by current retirees. Although baby boomers can expect higher incomes and lower poverty rates at retirement than current retirees have, they can also expect lower replacement rates. The decline in replacement rates is driven, in part, by a decline in Social Security replacement rates.

Changing Social Security Benefits to Reflect Child-Care Years: A Policy Proposal Whose Time Has Passed?

This article estimates the effects of proposals to increase the retirement benefits of women who reduce their earings to care for young children. Using the 1990 Survey of Income and Program Participation file—exactly matched to the Social Security Administration's record of lifetime earnings—the authors present the distribution of child-care dropout years by retirement cohort and other demographic characteristics, and estimate the dollar impact of adjustments for caregiving years. The policies examined do increase the retirement benefits of some women, but the increases on average are small, are lowered with each successive retirement cohort, and benefit women from the more privileged socioeconomic groups. Thus, because the policy effects are small and will diminish in the future, the time of efficacy for these proposals has passed. Subsidizing child-care dropout years does not seem to be a well-targeted policy.

Characteristics of Disabled-Worker Beneficiaries Receiving Workers' Compensation or Public Disability Benefits Compared With Disabled-Worker Beneficiaries Without These Additional Benefits

Characteristics of Individuals with Integrated Pensions

This article uses data from the Health and Retirement Survey to examine the characteristics of individuals who are covered under integrated pension plans by comparing them with people covered by nonintegrated plans and those with no pension plan.

Characteristics of Individuals with Integrated Pensions

Employer pensions that integrate benefits with Social Security have been the focus of relatively little research. Potentially this is an important omission given the current Social Security reform debate. Since changes in Social Security benefit levels and other program characteristics can affect the benefit levels and other features of integrated pension plans, it is important to know who is covered by these plans. This paper uses data from the Health and Retirement Survey to examine the characteristics of individuals who are covered under integrated pension plans by comparing them with people covered by non-integrated plans and those with no pension plan. The results show that individuals who are female, white, non-unionized, or do not have postgraduate education are significantly more likely to be in an integrated employer pension plan.

Characteristics of Noninstitutionalized DI and SSI Program Participants

Child Support Payments and the SSI Program

In determining the benefit amount for a child, the Supplemental Security Income program excludes one-third of child support payments from countable income. Legislation reauthorizing the 1996 welfare reform law contains provisions that would encourage states to allow children receiving Temporary Assistance for Needy Families (TANF) to keep more of the child support paid by an absent parent. These potential changes provide impetus to revisit the way the SSI program treats child support.

Choice and Other Determinants of Employee Contributions to Defined Contribution Plans

Understanding the role that 401(k) plan characteristics, such as investment choice, play in participation and employee contributions is important as more workers rely on this type of retirement plan and as proposals for Social Security solvency include individual savings plans. Using the 1992 Health and Retirement Study, this article investigates which individual and job characteristics are associated with asset choice in defined contribution plans. Investment choice is found to substantially increase contributions to such plans.

The Civilian War Benefits Program: SSA's First Disability Program

Coefficients of Between-Group Inequality: A Review

The quest for suitable indices to summarize the inequality between two groups has lagged behind the effort to obtain summary coefficients of within-group inequality. Numerous measures of within-group inequality were proposed, and their merits and shortcomings debated. Yet, apparently, at the same time, there was little exploration of alternative indices to the ratio-of-medians and ratio-of-means for measuring differences between groups.

Cohort-Specific Effects of Social Security Policy

Social Security has sizable obligations to workers who contributed and made savings decisions in the anticipation of future benefits, and the assessment of future options must explicitly account for impacts on these as well as future participants. To this end, our paper develops cohort-specific, general-equilibrium comparisons of concrete policy alternatives.

Cohort-Specific Measures of Lifetime Net Social Security Transfers

This paper develops estimates of lifetime net transfers across cohorts under the Social Security Old-Age and Survivors Insurance (OASI) program. Estimates are developed both from the perspective of individual cohorts, indicating the extent to which each cohort has received or can expect to receive its money's worth from the program, and from the perspective of the OASI program, indicating the extent of redistribution across cohorts. This paper also contrasts intercohort redistribution under the present OASI program with the redistribution that would have occurred under two counterfactual pay-as-you-go programs that incorporate different implicit standards of fairness. The data sources and techniques employed in this analysis provide a more accurate and extensive description of the treatment of different cohorts under the OASI program than has been available to date. Estimates based on past or projected data are presented for all cohorts participating in the OASI program since its inception through the cohort born in 2050.

Cohort-Specific Measures of Lifetime Social Security Taxes and Benefits

Collecting Information on Disability in the 2000 Census: An Example of Interagency Cooperation

This article reports research and analysis undertaken by a very successful collaborative, federal interagency work group on disability, convened by the Office of Management and Budget and charged with the development of a short set of disability questions for Census 2000. The process that culminated in the final disability questions on Census 2000 is described, along with a discussion of the complexities of defining and measuring disability.

Comparing Beneficiaries of the Medicare Savings Programs with Eligible Nonparticipants

This note focuses on participation in two entitlement programs that help reduce out-of-pocket expenses for low-income Medicare beneficiaries: the Qualified Medicare Beneficiary (QMB) program and the Specified Low-Income Medicare Beneficiary (SLMB) program. As of 1999, about 2.75 million eligible, noninstitutionalized individuals were not enrolled in these Medicare savings programs. The eligible nonparticipants differed substantially from the QMB and SLMB participants in that they were less likely to be Supplemental Security Income beneficiaries and more likely to be elderly, nonblack, and in relatively good health. These findings, which could help target future outreach efforts, are based on Survey of Income and Program Participation data matched with administrative records from the Social Security Administration.

Comparing Replacement Rates Under Private and Federal Retirement Systems

This article presents a comparison of replacement rates for employees of medium and large private establishments to replacement rates for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. This analysis shows the possibility of replacement rates exceeding 100 percent for FERS employees who contribute 6 percent of earnings to the Thrift Savings Plan over a full working career. Private-sector replacement rates were quite similar for workers with both a defined benefit and a defined contribution pension plan.

Compensating Workers for Permanent Partial Disabilities

There is substantial variability in how state workers' compensation laws provide benefits to workers who have a permanent partial disability. The basic approaches used by the states can be classified into four groupings, although important differences exist within each group. Depending on the approach used, workers with similar injuries can receive substantially different amounts of benefits. Because compensating permanent partial disabilities frequently involves contention, the matters in dispute will depend on the approach used to determine benefits. The continuation of such differences in approach suggests that the states have not found a single "best practice" for determining what such benefits should be.

Considerations for Potential Proposals to Change the Earliest Eligibility Age for Retirement

The earliest eligibility age (EEA) interacts with many other Social Security program rules, including the benefit formula and insured status requirements. Proposals to increase the EEA could affect some or all of these other rules depending on how policymakers design the proposal. By using a hypothetical proposal that increases the EEA, this policy brief illustrates how these interations work and discusses the options that policymakers would need to consider.

Coping with the Demographic Challenge: Fewer Children and Living Longer

This article examines the demographic challenge of an aging population on the U.S. Social Security system and the well-being of the elderly. It describes policy implications and some potential policy solutions to this challenge.

Cost-Neutral Policies to Increase Social Security Benefits for Widows: A Simulation for 1992

Among older women, widows are more likely to live in poverty than married women. Thus, increasing Social Security benefits to widows seems desirable. Shifting some Social Security benefits from the period when women live as part of a couple to the period when they are widows could reduce poverty. This article uses the 1991 Survey of Income and Program Participation exactly matched to the Social Security Administration's record of benefits to evaluate the effect on poverty rates of four cost-neutral proposals that transfer Social Security benefits from married couples to surviving widows. The policies would moderately decrease poverty rates among older women by reducing the rate for widows more than the slight increase in the rate for couples. The evaluated proposals include a proposal supported by the majority of the 1994-96 Advisory Council on Social Security that would calculate the survivor's benefit as 75 percent of the couple's benefit, reduce the spouse's benefit from 50 to 33 percent of the husband's benefit, and reduce benefits by 1.5 percent.

Counting the Disabled: Using Survey Self-Reports to Estimate Medical Eligibility for Social Security's Disability Programs

This paper develops an approach for tracking medical eligibility for the Social Security Administration's (SSA's) disability programs on the basis of self-reports from an ongoing survey. Using a structural model of the disability determination process estimated on a sample of applicants, we make out-of-sample predictions of eligibility for nonbeneficiaries in the general population. This work is based on the 1990 panel of the Survey of Income and Program Participation. We use alternative methods of estimating the number of people who would be found eligible if they applied, considering the effects of sample selection adjustments, sample restrictions, and several methods of estimating eligibility/ineligibility from a set of continuous probabilities. The estimates cover a wide range, suggesting the importance of addressing methodological issues. In terms of classification rates for applicants, our preferred measure outperforms the conventional single variable model based on the "prevented" measure.

Under our preferred estimate, 4.4 million people—2.9 percent of the nonbeneficiary population aged 18–64—would meet SSA's medical criteria for disability. Of that group, about one-third have average earnings above the substantial gainful activity limit. Those we classify as medically eligible are similar to allowed applicants in terms of standard measures of activity limitations.

Covariance Estimates for Regression Parameters from Complex Sample Designs: Application of the Weighted Maximum Likelihood Estimator to Linear and Logistic Regression Analysis in Which Observations Might Not be Independent

Statistical methods of variance estimation are presented in this paper for the analysis of survey data involving complex sample designs. With certain complex sample design, estimation of the covariance matrices in linear and logistic regression is not straightforward. The design may be complex because of disproportionate sampling of strata, necessitating the use of weights, or because the observations are not independent, or possibly both. Examples are given from projects at the Social Security Administration, and computer programs written in SAS (Statistical Analysis System) are provided.

Deeming Rules and the Increase in the Number of Children With Disabilities Receiving SSI: Evaluating the Effects of a Regulatory Change

This article examines a source of the growth in the SSI children's program: a relatively minor and little-noticed change in the financial eligibility rules. The way parental earnings were counted as income, or "deemed" to children (to use SSA language) was changed. The new, more generous financial eligibility rules added a small but significant number of recipients to the rolls after 1992 and also increased the benefit amounts for many of those already receiving SSI. Using SSA administrative data and a simulation technique, this article estimates how much the deeming policy change contributed to the expansion of the rolls and the cost of the program. We estimate that program costs of the deeming rule change were approximately $63 million annually in 1993 dollars. The change led to a 2-percent increase in the number of children on the rolls.

Defined Contribution Pension Plans and the Supplemental Security Income Program

This policy brief analyzes changes in the employer-sponsored pension system and the relationship of these changes to the Supplemental Security Income program's treatment of retirement plans. SSI does not treat assets in defined benefit and defined contribution retirement plans in the same manner. The primary difference is that a potential SSI recipient has access to the funds in a defined contribution plan, but a participant in the defined benefit plan has no access to the pension until attaining a specific age. The increasing prevalence of the defined contribution retirement plan and the decreasing prevalence of the defined benefit plan is one significant change—a trend that has gained momentum since the mid-1980s. The importance of these issues relates to the extent of pension plan holdings among SSI applicants and recipients, which is in turn directly related to their involvement in the labor force. The policy brief discusses three alternate approaches to SSI treatment of defined contribution retirement plans, one of which is to retain the current policy.

The Demand for Older Workers: The Neglected Side of a Labor Market

Despite extensive study of the work and retirement decisions of older individuals, the nature of employers' demand for older workers remains relatively unexplored. This paper investigates the plausibility, pervasiveness, and causes of limited employment opportunities for older workers by examining age discrimination, long-term employment relationships, and partial-retirement work options. The central theme is that much of the differential treatment of older workers that persists over time is likely to be part of a privately efficient, economic equilibrium. Provisional implications for Social Security and age-work policy choices are drawn.

Demographic and Economic Characteristics of Children in Families Receiving Social Security

Each month, over 3 million children receive benefits from Social Security, accounting for one of every seven Social Security beneficiaries. This article examines the demographic characteristics and economic status of these children using Social Security administrative records matched to the 1996 Survey of Income and Program Participation. Most child beneficiaries receive benefits based on the earnings of a deceased or disabled parent, and nearly two-thirds live in female-headed families. The families of child beneficiaries rely about equally on earnings and income from Social Security for economic support. On average, the family income of child beneficiaries was 25 percent lower than that of all children, but there was no statistically significant difference in the poverty rates of the two groups.

Design and Implementation Issues in Swedish Individual Pension Accounts

Sweden's new multipillar pension system includes a system of mandatory fully funded individual accounts. The Swedish system offers contributors more than 600 fund options from a variety of private-sector fund managers. However, in the most recent rounds of fund choice, more than 90 percent of new labor market entrants have not made an active choice of funds and thus have ended up in a government-sponsored default fund.

The Swedish system offers a number of lessons about implementing a mandatory individual account tier. Centralized administration keeps administrative costs down but requires considerable lead time. A very large number of fund options are likely to be offered unless strong entry barriers are in place. Engaging new labor market entrants in fund choice is likely to be difficult. A significant percentage of those making an active fund choice may choose funds that are very specialized and risky. Finally, special care must be devoted to designing a default fund and continual consumer communication.

Determinants of the Growth in the Social Security Administration's Disability Programs—An Overview

This article examines factors affecting the growth in the Social Security Administration's disability programs. We synthesize recent empirical evidence on factors affecting trends in applications and awards for Disability Insurance and Supplemental Security Income (SSI) benefits and duration on the rolls. Econometric analyses of pooled time-series, cross-sectional data for States provide strong evidence of business cycle effects on applications and, to a lesser extent, on awards. Substantial effects of cutbacks in State general assistance programs are also found, especially for SSI. Estimated effects of the aging of the baby boomers, growth in the share of women who are disability insured, the AIDS epidemic, and changes in family structure are also presented. Indirect evidence suggests the importance of programmatic factors, especially for awards, and especially in the mental and musculoskeletal impairment categories. The decline in the average age of new awardees has substantially increased duration, particularly for SSI. As a result, caseload growth would be expected to continue even in the absence of future award growth.

The Development of a New Geographic Coding System for the Continuous Work History Sample

This article describes the statistical development of the geographic coding system used to identify worker location for the Continuous Work History Sample. The new system—which is planned for implementation for data year 1993—will provide more accurate geographic distributions of workers within a residence concept than the old system could provide within an employer location concept. The article also presents the results of a pilot study that tested the operational aspects of the new system. The results provide some preliminary estimates of the effect of the revised codes on the geographic distribution of workers.

The Development of the Project NetWork Administrative Records Database for Policy Evaluation

This article describes the development of SSA's administrative records database for the Project NetWork return-to-work experiment targeting persons with disabilities. The article is part of a series of papers on the evaluation of the Project NetWork demonstration. In addition to 8,248 Project NetWork participants randomly assigned to receive case management services and a control group, the simulation identified 138,613 eligible nonparticipants in the demonstration areas. The output data files contain detailed monthly information on Supplemental Security Income (SSI) and Disability Insurance (DI) benefits, annual earnings, and a set of demographic and diagnostic variables. The data allow for the measurement of net outcomes and the analysis of factors affecting participation. The results suggest that it is feasible to simulate complex eligibility rules using administrative records, and create a clean and edited data file for a comprehensive and credible evaluation. The study shows that it is feasible to use administrative records data for selecting control or comparison groups in future demonstration evaluations.

Diagnostic Trends of Disabled Social Security Beneficiaries, 1986–93

Growth in the number of applications and subsequent awards for Social Security disabled-worker benefits marked the period from 1986 through 1993. These increases resulted in the 37 percent rise in the number of disabled-worker beneficiaries, 6 out of 10 of whom had disabilities within three diagnostic groups: circulatory disorders; mental disorders (other than mental retardation); and musculoskeletal diseases. The percentage of disabled workers with a circulatory condition decreased from 21 to 14 percent, while the percentage with a mental disorder increased from 20 to 25 percent, and the percentage with musculoskeletal conditions increased from 18 to 21 percent. Musculoskeletal conditions (22 percent) were the leading diagnosis among disabled widows and widowers in 1993, while the disabled adult child population was dominated by the mental retardation diagnostic group (63 percent). Variations in diagnostic conditions of disabled workers by sex, age, and region were often substantial.

Disability Beneficiary Recovery

In recent years, the number of workers awarded disability insurance benefits has rapidly increased, while there has been no corresponding increase in the numbers leaving the rolls for recovery. Concern has been expressed that cash benefit payments may be leading to disincentives to beneficiaries to return to work after medical improvement

To examine this question, a comparative analysis was made of the demographic, disability, and benefit characteristics of a sample of disabled workers who left the benefit rolls for recovery in contrast to the characteristics of those who remained on the rolls after award of disability benefits in 1972. Characteristics related to greater recovery included younger age, higher education, disability due to traumatic injury, residence in western states.

Disability Claimants Who Contest Denials and Win Reversals Through Hearings

This paper presents the social and demographic characteristics of those disability claimants whose cases go to hearing. Particular attention is given to how these characteristics may be related to (1) the individual decision to contest a denial or accept it; (2) the general increase in disability claims and contested applications in recent years; and (3) the high proportion of reversals in hearings.

Disability Patterns Among SSI Recipients

In December 1993, about 3.8 million persons under age 65 received Supplemental Security Income (SSI) payments because of a disability. More than half of these recipients had some form of mental disorder. In recent years, the number of disabled SSI recipients has climbed sharply. At the same time, there has been a change in the disability patterns among these recipients. The proportion of recipients with mental disorders, particularly those with psychiatric illness, is increasing steadily. Many of these recipients enter the SSI program in their youth and may stay in the program for many years. Similar increases and disability patterns in the Social Security Administration's Disability Insurance (DI) program imply program related causes, including recent changes to the disability requirements and outreach efforts. These changing disability patterns have implications for the size and shape of future SSI caseloads.

Disability Trends in the United States: A National and Regional Perspective

Between 1978 and 1993, the number of persons receiving disability benefits under either the Supplemental Security Income program or the Old-Age, Survivors, and Disability Insurance program increased more than 43 percent—from 4.7 million to 6.7&nbp;million. In 1993, 4.08 percent of the U.S. resident population aged 18–64 were receiving a disability benefit under one or both of the programs, compared with 3.37 percent of 1978. This ratio had declined to 2.93 percent in 1983. The article examines the change in growth sice 1975 in each of the two disability programs and provides an overview of key legislative changes occurring during the period. The emphasis is on regional and State changes during the 1987–92period, identifying those areas where growth has been the most dramatic.

Disability, Welfare Reform, and Supplemental Security Income

The Temporary Assistance for Needy Families program serves as both a safety net and a way station for families with disabilities. According to most studies, at least a third of all households receiving these benefits include an adult or child with a disability. Surveys have found that persons with disabilities receiving these benefits were less likely to be working. Sanctioning rates of these families exceed those for families without disabilities, and continuing poverty is more common among cases that close. There is overlap between this welfare program and Supplemental Security Income; more than one out of every six of these families included a recipient of Supplemental Security Income in 2002.

Disabled Workers and the Indexing of Social Security Benefits

This article presents the distributional effects of changing the Social Security indexing scheme, with an emphasis on the effects upon disabled-worker beneficiaries. Although a class of reform proposals that would slow the rate of growth of initial benefit levels over time—including price indexing and longevity indexing—initially appear to affect all beneficiaries proportionally, there can be different impacts on different groups of beneficiaries. The impacts between and within groups are mitigated by (1) the offsetting effect of changes in Supplemental Security Income benefits at the lower tail of the income distribution, and (2) the dampening effect of other family income at the upper tail of the income distribution. The authors present estimates of the size of these effects.

The Distribution of OASDI Taxes and Benefits by Income Decile

On average, persons receiving Social Security benefits tend to have lower current incomes than do persons paying Social Security taxes. This article documents OASDI's income distributional patterns by dividing the 1992 Current Population Survey population into 10 income deciles and tabulating benefits received and taxes paid by each decile. The benefits and taxes, when compared with non-Social Security income, are progressive: as income rises from decile to decile, the ratio of benefits to income falls, and, except at the highest deciles, the ratio of taxes to income rises.

A large component of the current income distributional pattern is associated with age: the young on average receive more income and pay more taxes; the old on average receive more benefits. However, when benefits and taxes are tabulated for income deciles within specific age groups, a general progressivity is still observable, although it is weaker than that for the population as a whole.

Distribution of Zero-Earnings Years by Gender, Birth Cohort, and Level of Lifetime Earnings

This note uses data from the Modeling Income in the Near Term (MINT) project to estimate the distribution of zero-earnings years by gender, birth cohort, and level of lifetime earnings from 1951 to 1996. The analysis is focused mainly on zero-earnings years that fall within a worker's highest 35 years of earnings, because only these years are used in the calculation of benefits.

The Distributional Consequences of a "No-Action" Scenario

The 2001 report of the Social Security trustees projected that the combined trust funds for the Old-Age and Survivors Insurance and Disability Insurance programs will be exhausted in 2038. This analysis explains the effects of insolvency on future retirement benefits and poverty rates of beneficiaries if no action is taken to strengthen Social Security.

The Distributional Consequences of a "No-Action" Scenario: Updated Results

Under the Social Security program, benefits are paid to retired workers, survivors, and disabled persons out of two trust funds—the Old-Age and Survivors Insurance and the Disability Insurance (OASDI) Trust Funds. In their 2005 report, the Social Security Trustees projected that the combined OASDI trust funds would be exhausted in 2041. Because the trust funds are used to pay benefits, retirement benefits would have to be reduced somewhat in 2041 and more drastically in 2042.

If no action were taken to strengthen Social Security, the benefit reductions necessitated by the exhaustion of the trust funds would double the poverty rate of Social Security beneficiaries aged 64–78 in 2042, from 1.5 percent to 3.3 percent. However, this increased poverty rate would still be lower than the current poverty rate for beneficiaries aged 62–76, which is 4.6 percent. In addition, the trust funds' exhaustion could lead to lower returns on payroll taxes using traditional "money's-worth" measures.

The Distributional Effects of Changing the Averaging Period and Minimum Benefit Provisions

This study evaluates the effects of changing the averaging period used to calculate Social Security benefits from 35 years to 38 or 40 years and the introduction of a minimum benefit provision for future retirees born during the early part of the baby boom generation. Proposals to change the averaging period have been recommended by a majority of the 1994–96 Advisory Council on Social Security. Based on the Survey of Income and Program Participation (SIPP) matched to Social Security Administration earnings records, the study projects retirement benefits for different subgroups of the population under existing and proposed benefit rules. The magnitudes of the retirees' benefit changes vary by demographic group. The minimum benefit provision substantially mitigates the effects of the change to a 40-year averaging period for some groups of women.

Divorced Women at Retirement: Projections of Economic Well-Being in the Near Future

This article describes the economic resources and economic well-being of future divorced women at retirement using data from the Social Security Administration's project on Modeling Income in the Near Term (MINT). The MINT model projects that in the near term, there will be more divorced women of retirement age. Because fewer of those women are projected to meet the 10-year marriage requirement, the proportion of economically vulnerable aged women is expected to increase when the baby boom retires.

Do Early Retirees Die Early? Evidence from Three Independent Data Sets

In a 2001 working paper, Links Between Early Retirement and Mortality (ORES Working Paper No. 93), the author used cross-sectional Current Population Survey (CPS) matched to longitudinal Social Security administration data and found that men who retire early die sooner than men who retire at age 65 or older. Estimates of relative mortality risk control for current age, year of birth, education, marital status in 1973, and race, and the sample is restricted to men who have lived to at least age 65.

This paper uses the 1982 New Beneficiary Survey and a 1 percent extract of the Social Security Administration's year 2000 Master Beneficiary Records to test whether the mortality differentials reported in the author's earlier work can be replicated in other independent data sets.

Does Retirement Education Teach People to Save Pension Distributions?

Education about retirement affects how employees use distributions from their defined contribution pension plans. Retirement education substantially increases the probability that participants age 40 and under will save a distribution but decreases the probability that college graduates and women will save one. These important differentials are concealed by estimates of the effect of retirement education on participants generally.

Early Retirees Under Social Security: Health Status and Economic Resources

Policies that would reduce or eliminate Social Security benefits for early retirees could have adverse consequences for older workers in poor health. This article documents the health and financial circumstances of beneficiaries aged 62–64. It examines the extent to which poor health limits work among early retirees and assesses the extent to which curtailment of early retirement benefits might lead to increases in the Disability Insurance program rolls.

Early Retirees Under Social Security: Health Status and Economic Resources

Some proposals to change the Social Security program to ensure long-run solvency would reduce or eliminate benefits to some early retirees. To what extent might those benefit reductions cause hardship for individuals with precarious financial circumstances and whose health appears to limit their ability to offset reductions in Social Security income through increased earnings? Our research is intended to identify the size and characteristics of the population that might be at risk as a consequence of such changes.

The central finding is that over 20 percent of early Social Security retirees have health problems that substantially impair their ability to work. In fact, among those aged 62–64 who are severely impaired, there are as many Old-Age and Survivors Insurance beneficiaries as there are beneficiaries under SSA's two disability programs. The retirement program functions as a substantial, albeit unofficial, disability program for this age group. Moreover, the majority of the most severely impaired early retirees would not qualify for Disability Insurance benefits.

Earnings Histories of SSI Beneficiaries Working in December 1997

This article looks at the history of earnings in covered employment for the 300,000 disabled SSI beneficiaries who were working in December 1997. It provides background information on beneficiaries essential to SSA's efforts to help them return to work.

Earnings of Black and Nonblack Workers Who Died or Became Disabled in 1996 and 1997

Social Security solvency proposals may affect blacks as a group differently than those of other races because of differences in earnings, mortality, and rates of disability. To provide some background for understanding this issue, this note examines the earnings of workers by age and race, comparing those who recently died or became entitled to Social Security disability benefits with those still alive. It does not analyze any specific proposal for changing benefits.

The Economic Consequences of a Husband's Death: Evidence from the HRS and AHEAD

Despite increased labor force participation rates among women and reforms under the Employee Retirement Income Security Act, widowhood remains an important risk factor for transition into poverty, although somewhat less so than 20 years ago. Women widowed at younger ages are at greatest risk for economic hardship after widowhood, and their situation declines with the duration of widowhood. We also find that women in households that are least prepared financially for widowhood are at greatest risk of a husband's death, because of the strong relationship between mortality and wealth.

Economic Retirement Studies: An Annotated Bibliography

This bibliography is a by-product of preparing a review of the economic literature on the effect of Social Security's retirement program on the labor supply of older workers. In the course of organizing a set of scribbled notes, the outline of the current document began to take shape. Several colleagues found earlier, incomplete drafts of these notes to be of some value in their own work, and encouraged me to offer them to a wider audience.

These notes are intended to provide a helpful overview of the models, data sources, and statistical procedures used by economists in recent years to investigate the work-retirement decision.

The Economic Well-Being of Social Security Beneficiaries, with an Emphasis on Divorced Beneficiaries

There are numerous types of benefits paid under the Social Security programs of the United States, with each type of benefit having its own set of eligibility rules and benefit formula. It is likely that there is an association between the type of benefit a person receives and the economic circumstances of the beneficiary. This paper explores that association using records from the Current Population Survey exactly matched to administrative records from the Social Security Administration. Divorced beneficiaries are a particular focus of this paper.

Type of benefit is found to be a strong predictor of economic well-being. Two large groups of beneficiaries, retired-worker and aged married-spouse beneficiaries, are fairly well off. Other types of beneficiaries tend to resemble the overall U.S. population or are decidedly worse off. Divorced-spouse beneficiaries have an unusually high incidence of poverty and of serious health problems. A proposal to increase benefits for these beneficiaries is evaluated. Results indicate that much of the additional government expenditures would be received by those with low income.

The Economic Well-Being of Social Security Beneficiaries, with an Emphasis on Divorced Beneficiaries

There are numerous types of benefits paid under the Social Security programs of the United States, with each type of benefit having its own set of eligibility rules and benefit formula. It is likely that there is an association between the type of benefit a person receives and the economic circumstances of the beneficiary. This article explores that association using records from the Current Population Survey exactly matched to administrative records from the Social Security Administration. Divorced beneficiaries are a particular focus of this article.

Type of benefit is found to be a strong predictor of economic well-being. Two large groups of beneficiaries, retired-worker and aged married spouse beneficiaries, are fairly well-off. Other types of beneficiaries tend to resemble the overall U.S. population or are decidedly worse off. Divorced spouse beneficiaries have an unusually high incidence of poverty and an unusually high incidence of serious health problems. A proposal to increase benefits for these beneficiaries is evaluated. Results of the analyses indicate that much of the additional Government expenditures would be received by those with low income.

The Economic Well-Being of the Old Old: Family Unit Income and Household Wealth

This paper examines the family income and the household wealth and income of old old persons. Subgroups of the old old are compared, and the old old are compared with the young old. When the old old group is separted into three subgroups—widows living alone, other females, and males—the economic status of widows living alone is substantially below that of the other two subgroups. This difference is found when income, wealth, and combined income-wealth measures are used. When the old old group is compared with the young old group, the economic status of the old old is substantially lower for all measures examined. When the three subgroups within both the old old and young old groups are compared, the economic status of each subgroup is lower for the old old for most measures. Income data from the March 1991 Current Population Survey and wealth and income data from the 1984 Survey of Income and Program Participation are used.

Economic Well-Being of the Old Old: Family Unit Income and Household Wealth

This article examines the family income and the household wealth and income of old old persons. Subgroups of the old old are compared and the old old are compared with the young old. When the old old group is separated into three subgroups—widows living alone, other females, and males—the economic status of widows living alone is substantially below that of the other two subgroups. This difference is found when income, wealth, and combined income-wealth measures are used. When the old old group is compared with the young old group, the economic status of the old old is substantially lower for all measures examined. When the three subgroups within both the old old and young old groups are compared, the economic status of each subgroup is lower for the old old for most measures. Income data from the March 1991 Current Population Survey and wealth and income data from the 1984 Survey of Income and Program Participation are used.

The Economics of Retirement: A Nontechnical Guide ^*

This paper provides a nontechnical explanation of the basic ideas that underpin economists' thinking about work and retirement decisions and discusses and elaborates on the basic economic model of retirement. The paper begins with a simple economic model of an individual's work decision, to explain the construction and logic of this model, and to show how the model can be used to make basic predictions about factors that might plausibly affect the timing of retirement. From this starting point—which essentially describes the economic retirement models before the late 1970s—the paper then explains how the model has been extended during the past 2 decades. The increasing sophistication and complexity of the models reflect scientific progress in which new retirement research incorporates the findings of previous efforts, the desire to incorporate more realism into the models, and the availability of improved data. The progress in economic modeling is emphasized as the contributions of various influential studies are reviewed.

The Economics of Retirement: A Nontechnical Guide

Concern about the economic consequences of the aging of the United States population has prompted considerable research activity during the past two decades. Economists have carefully examined retirement patterns and trends, and sought to identify and measure the determinants of the timing of retirement by older workers. Much of the published retirement research is fairly technical by nature and is somewhat inaccessible to nonspecialist audiences. This article provides a nontechnical overview of this research. In contrast to other reviews of the retirement literature, this exposition emphasizes the basic ideas and reasoning that economists use in their research. In the course of recounting how economists' views about retirement have evolved in recent years, the article highlights landmark pieces of research, points out the specific advances made by the various researchers, and assesses what has been learned along the way.

The Effect of Removing 70- and 71-Year-Olds from Coverage Under the Social Security Earnings Test

The Effect of the SSI Program on Labor Supply: Improved Evidence from Social Security Administrative Files

We use public-use microdata linked to Social Security Administration records to reexamine the impact of the Supplemental Security Income program on work disincentives among older individuals nearing the age of eligibility for Supplemental Security Income for the aged and likely to use the program. The administrative records provide significant advantages relative to past research and yield strong evidence that the Supplemental Security Income program induces some individuals nearing the age of eligibility to reduce their labor supply.

The Effect of Vocational Rehabilitation and Work Incentives on Helping the Disabled-Worker Beneficiary Back to Work

This article is the second in a series of articles that use data from the New Beneficiary Followup survey to analyze the work effects of the Social Security Administration's Disability Insurance beneficiaries. Survival analysis techniques are used to determine the effect of vocational rehabilitation efforts and work incentive program provisions on actual work outcomes. The findings indicate that the demographic variables of age, gender, race, education, and marital status affect the tendency to return to work in the expected way. The results suggest a possible disincentive effect may be built into certain work incentive provisions of the program. The encouraging news is that the vocational rehabilitation efforts seem to have a positive effect on the tendency to return to work. Physical therapy, vocational training, general education, and job placement efforts all seem to increase the tendency to go back to work.

The Effect of Welfare Reform on SSA's Disability Programs: Design of Policy Evaluation and Early Evidence

Recent legislation has affected the populations served by the Social Security Administration's (SSA's) disability programs. The Contract with America Advancement Act of 1996 mandated that persons whose disability determination was based on drug addiction or alcoholism be removed from the Supplemental Security Income and Social Security Disability Insurance rolls. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (later amended by the Balanced Budget Act of 1997) tightened the SSI eligibility criteria for children and converted the Aid to Families with Dependent Children program into a block grant, Temporary Assistance for Needy Families. This article describes the design of three related studies evaluating the direct and indirect effects of these policy changes on SSA's disability populations. It describes the methodological challenges of the studies and the strategies used to overcome them. It also presents early evidence from the three studies and discusses future directions.

Effect on Benefits of Earnings at Ages 65 or Older, 1995

A major policy issue for the Social Security program is the treatment of earnings of persons who have attained retirement age. This article discusses the retirement test and recomputation of benefit provisions, and provides statistical data for 1995.

In 1995, about 806,000 persons aged 65–70 had significant earnings resulting in the withholding of benefits by the retirement test. About 1,659,000 persons aged 65 or older realized an increase in their benefit amount because of their earnings.

Effective Retirement Savings Programs: Design Features and Financial Education

This article provides an overview of the literature on best practices for retirement savings plan design and financial education in the workplace. Without a successful plan design, financial education will not be effective and even a well-structured plan can fail to achieve retirement savings goals without financial education. The main components of a retirement savings program that employers must consider include options for enrollment, investment choices, employer matching of contributions, and distributions over the working career and at retirement. In addition, employers control the core aspects of financial education, such as the topics covered, the delivery methods used, the frequency with which it is offered, and its general availability.

Efforts Since 2000 to Simplify the SSI Program: Legislative and Regulatory Changes

Supplemental Security Income SSI is a federally administered, means-tested program that provides monthly payments to blind, disabled, or aged persons. This policy brief summarizes efforts since 2000 to simplify the SSI program through policy changes affecting the reporting of income and resources. The Social Security Protection Act (SSPA) of 2004 has provisions that simplify the treatment of infrequent and irregular income, interest and dividend income, income earned by a student, one-time income in an initial month of eligibility, military pay, and exclusion of certain income from countable resources. Final regulations published in 2005 contain simplifications in the definition of income to exclude clothing, household goods and personal effects, and automobiles from countable resources. This brief explains those changes and describes other options that have been considered.

Eligibility for the Medicare Buy-in Programs, Based on a Survey of Income and Program Participation Simulation

Fewer people appear eligible for Medicare buy-in programs than most earlier research indicated, implying that participation rates may be higher than previously believed. The authors estimate a 63 percent rate of participation among those eligible for the combined Qualified Medicare Beneficiary and Specified Low-Income Medicare Beneficiary programs in 1999. The estimates are based on Survey of Income and Program Participation data matched to the Social Security Administration's administrative records. The matched data provide information of better quality than the data used in previous studies.

The Erosion of Retiree Health Benefits and Retirement Behavior: Implications for the Disability Insurance Program

The number of companies offering health benefits to early retirees is declining, although reductions in the percentage of early retirees covered by health insurance have been only slight to date. In general, workers who will be covered by health insurance are more likely than other workers to retire before the age of 65, when they become eligible for Medicare. What effect that will have on claims under the Disability Insurance program is not yet clear.

Estimates of Unreported Asset Income in the Survey of Consumer Finances and the Relative Importance of Social Security Benefits to the Elderly

Through the 1990s and the early 2000s, the Income of the Population 55 or Older has reported a decline in the proportion of the elderly receiving asset income and the corresponding rise in the proportion receiving all of their income from Social Security. This analysis uses the Survey of Consumer Finances from 1992 to 2001 to examine financial asset holdings of the elderly and to determine if those who do not report asset income in fact might hold assets that are likely to generate income. Imputing asset income from likely income-producing holdings, the article examines the impact of probable missing asset income information upon measures of elderly income.

Estimation of Disability Status as a Single Latent Variable in a Model with Multiple Indicators and Multiple Causes

In this paper, we are concerned with the underlying structure of self-definitions of disability. Our purpose is to identify the contribution of exertional and nonexertional impairment and the contributions of such nonmedical factors as age, sex, and education to the individuals' assessment of their own situations. On a statistical level, we seek to accomplish a substantial reduction of a large number of data items into a form that can be used conveniently in subsequent behavioral analyses.

Evaluating the Initial Impact of Eliminating the Retirement Earnings Test

How did workers aged 65–69 respond to the removal of the retirement earnings test in 2000? Using Social Security administrative data matched with data from the Survey of Income and Program Participation, the author finds that the higher earners in this group increased their earnings, while the lower earners did not. The author reports an acceleration of benefit applications by workers aged 65–69 but no clear evidence of increased employment in this age group.

Evidence on the Effects of Payroll Tax Changes on Wage Growth and Price Inflation: A Review and Reconciliation

The Social Security payroll tax rate is scheduled to increase by almost 1 percent for both employees and employers between now and 1990. One of the major elements of the recently adopted Social Security package was an acceleration of the timing of this increase. A number of economists have recommended that as an anti-inflationary policy scheduled increases be avoided or even that the current rates be rolled back.

An Example of the Use of Statistical Matching in the Estimation and Analysis of the Size Distribution of Income

This paper discusses the use of statistical matching in the estimation and analysis of the size distribution of family unit personal income. Statistical matching is a relatively new technique that has been used to combine, at the single observation level, data from two different samples, each of which contains some data items that are absent from the other file. In a statistical match, the information brought together from the different files ordinarily is not for the same person but for similar persons; the match is made on the basis of similar characteristics. In contrast, in an "exact" match, information for the same person from two or more files is brought together using personal identifying information.

Executive Summary from—Technical Panel on Assummptions and Methods (2003); Report to the Social Security Advisory Board

The full report is available at http://www.ssab.gov/NEW/documents/2003TechnicalPanelRept.pdf.

On the Existence of Pareto-Superior Reversals of Dynamically Inefficient Social Security Programs

Some proponents of the privatization of the Social Security program in the United States have suggested that, because privately available rates of return exceed the internal rate of return implicit in that program, it may be possible to find Pareto-superior privatization schemes. In a similar vein, Townley (1981) argues that, so long as the government can incur debt, a Pareto-superior scheme can always be found to convert a dynamically inefficient pay-as-you-go Social Security program to a fully funded basis. This note uses Townley's own model to demonstrate analytically that Pareto-superior schemes to reverse a dynamically inefficient pay-as-you-go social security program do not exist, either through privatization or through conversion of the program to a fully funded basis.

Expenditures of the Aged

This article includes a short overview of existing research and reprints some of the charts available in the Expenditures of the Aged Chartbook. The goal of the chartbook is to improve the availability of statistics on expenditures of the aged. Data are based on the 2002 Consumer Expenditure Survey Public-Use File. Measures of standards of living, such as expenditures, help inform policymakers and researchers who are concerned about the adequacy of economic resources of the aged.

Factors Affecting the Work Efforts of Disabled-Worker Beneficiaries

Congress is currently placing considerable emphasis on returning disabled-worker beneficiaries to work. However, going back to work is only the first step in the complex process of program termination due to work and trust fund savings. Not only must the beneficiary get a job, but also the work effort must be sustained at what is considered a substantial gainful activity (SGA) level by the disability program (so that an SGA termination will result) and a reasonable living condition must be achieved by the beneficiary(so that the person is motivated to continue working and lose benefits). This articles focuses on those factors that affect the ability of the beneficiary to sustain such a work effort. Combined with previous findings about returning to work, we begin to see the overall effect of the factors on work efforts.

Beneficiaries who have physical therapy rehabilitation have a higher tendency to start working and a lower tendency to stop. Those with vocational training or general education have a higher tendency to start working, but these factors do not help to sustain the effort. Beneficiaries who were helped with job placement have a higher tendency to start work, but they also have a higher tendency to stop. If beneficiaries knew about the trial-work period, but not about either the extended period of eligibility or Medicare continuation, then they had a higher tendency to start work and a higher tendency to stop. However, if they knew about all three work-incentive provisions, then the tendency to work was not affected.

Family Income, Age, and Size of Unit: Selected International Comparisons

This exploratory paper examines the role of age in the distribution of family income in several countries. Unlike most papers that compare the distribution of income across countries, the primary concern in this paper is not with comparisons of the overall degree of inequality. Instead we are more interested in two aspects of the cross-section relationship between age and income. First, we are interested in the relative economic well-being of income recipient units in different age (of head) groups in several developed countries. In the U.S. in recent years, in connection with modifications to the social security system, there has been considerable discussion of the "fair" level of income of the aged population. That discussion has led us to a particular interest in the relative economic well-being of the aged population in other developed countries. Where the data allow, the aged (age 65 and over) group is split into 65–69 and 70 and over age groups as at least partial recognition that economic well-being can differ markedly among subgroups of the aged population. (Other important characteristics such as labor force participation, sex, and the receipt of government retirement income could not be examined.) This paper attempts an initial look at the very complex subject of the relative economic well-being of different age groups in several countries.

The Family Labor Supply Response to Disabling Conditions

The role of time as an input into the utility maximization process has long been recognized in the labor/leisure decision. Expanded research has dealt with this input in a family context. Assuming a joint utility maximization model, the resulting labor supply functions can be determined for both spouses.

The model presented here is an extension of previous models by its incorporation of the effects of disabling conditions of the husband on the labor supply decisions of both spouses.

Because hours worked takes on a lower limit of zero, the standard simultaneous equation techniques would yield estimates lacking the ideal properties. Instead, the model is estimated using a simplification of a simultaneous TOBIT techinique, which yields consistent estimates.

Family Unit Incomes of the Elderly and Children, 1994

The economic status of the elderly and the economic status of children are analyzed using a comprehensive definition of income that takes selected types of noncash income and taxes into account. Estimates are presented for detailed age groups over the entire age range and for socioeconomic classifications within the elderly subgroup and within the subgroup of children. The paper finds that children and the elderly are less well off than the middle age groups. This result is obtained using median incomes and the percentage of the group that has low income, as defined here. When results obtained with the measures presented in this paper are compared with results obtained with more commonly used measures, there are important differences for both the elderly and for children. For both groups, the composition of the low-income population differs in important ways from the composition of the official poverty population.

Federal Income Taxes, Social Security Taxes, and the U.S. Distribution of Income, 1972

This paper reports on estimates of federal income tax and Social Security tax liabilities of family units in 1972 and summarizes the methods used to make the estimates. Distributions of income both before and after subtracting those liabilities are shown. Several microdata files were combined using both "exact" and "statistical" matching of individual observations in the process of making these estimates.

The Financial Outlook for the Social Security Disability Insurance Program

Social Security's Office of the Chief Actuary provides an overview on the current and projected financial condition of the Disability Insurance program.

Financing Social Security 1939-1949: A Reexamination of the Financing Policies of this Period

Presented is an examination of the financing history of the U.S. Social Security system from the passage of the original law in 1935 up through the enactment of the 1950 Amendments to the Social Security Act. In particular, it focuses on the 1939 Social Security Amendments and the subsequent tax rate freezes enacted between 1939 and 1949. It examines the origins of these taxing policies and assesses the impact of the rate freezes on the long-range actuarial balance of the Social Security program during this period.

Follow-up of Former Drug Addict and Alcohol Beneficiaries ^*

The Fraction of Disability Caused at Work

Disability has high societal and personal costs. Various disparate federal and state programs attempt to address the economic and social needs of people with disabilities. Presumably workplace injuries and accidents are an important source of disability. Yet separate public policies and research literatures have evolved for these two social problems—disability and workplace injuries—despite their relatedness. This article seeks to document the overlap between these two phenomena in estimating the proportion of the disabled population whose disability was caused by workplace injury, accident, or illness using the Health and Retirement Study of 1992. The results point toward the need for initiatives to reduce disability that focus on work-related causes, which are a common pathway to disability, and that may result in substantial savings in federal programs.

The Galveston Plan and Social Security: A Comparative Analysis of Two Systems

This report presents a comparison of benefits under the Galveston Plan versus Social Security, based on different earner and family scenarios. These scenarios include single and married workers at the low, middle, high, and very high earnings levels.

A Guide to Social Security Money's Worth Issues

This paper discusses some of the major issues associated with the question of whether workers receive their money's worth from the Social Security program. An effort is made to keep the discussion as nontechnical as possible, with explanations provided for many of the technical terms and concepts found in the money's worth literature. Major assumptions, key analytical methods, and money's worth measures used in the literature are also discussed. Finally, the key findings of money's worth studies are summarized, with some cautions concerning the limitations and appropriate usage of money's worth analyses.

A Guide to Social Security Money's Worth Issues