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HOW WELL DID SOCIAL SECURITY MITIGATE THE EFFECTS OF THE GREAT RECESSION?
Author(s) -
Peterman William B.,
Sommer Kamila
Publication year - 2019
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12392
Subject(s) - recession , consumption (sociology) , welfare , economics , social security , shock (circulatory) , social welfare , great recession , monetary economics , macroeconomics , labour economics , political science , market economy , medicine , sociology , social science , law
Using a computational life cycle model, this article assesses how Social Security affects the welfare of different types of individuals during the Great Recession. Overall, we find that Social Security reduces the average welfare losses for agents alive at the time of the Great Recession by the equivalent of 1.4% of expected future lifetime consumption. Moreover, we show that although the program mitigates some of the welfare losses for most agents, it is particularly effective at mitigating the losses for agents who are poorer and/or older at the time of the shock.