Preliminary. Not for Quotation. The Effects of Changes in Women’s Labor Market Attachment on Redistribution under the Social Security Benefit Formula

findings and conclusions expressed are solely those of the authors and do not represent the views of the SSA or the MRRC. David Olson of the SSA was extremely helpful to us in dealing with the ANYPIA program. Studies conducted in the early 1990s analyzed whether the progressive Social Security benefit formula succeeds in redistributing benefits from high to low earners. These studies suggested that while the benefit formula fostered significant redistribution from individuals with high earnings to those with low earnings, there was much less redistribution of benefits from households with high earnings to households with low earnings. With wives earning much less than their husbands, effectively much of the redistribution was from high earning husbands to their lower earning wives. In addition, spouse and survivor benefits accrued disproportionately to high income households. Both factors mitigated redistribution at the household level. This paper compares outcomes for the earlier cohort with those of a cohort born twelve years later. We use data from the Health and Retirement Study, hold values in 2004 dollars, and study a population consisting of members of households with at least one person age 51 to 56