How Might Earnings Patterns and Interactions Among Certain Provisions in OASDI Solvency Packages Affect Financing and Distributional Goals?

Abstract

Analysts often compile packages of Social Security changes based on publicly available projections of the effects of individual provisions. Such analyses may neglect issues of whether and how the provisions might interact to alter intended outcomes, thwarting the proposal’s financing and distributional goals. To inform policymakers about the importance of such interactions in examining the cost and distributional implications, we catalog a range of possible interactions, including some that are subtle and not well understood. Using data on U.S. workers from the Survey of Income and Program Participation matched to administrative records, we document important patterns in work and benefit histories to show how several commonly discussed Social Security proposals would affect different population groups. We then use DYNASIM, the Urban Institute’s dynamic microsimulation model, to measure how accounting for interactions among a few of these provisions changes projections of distributional effects.