WI23-09: Social Security Policy Design and Racial Wealth Disparities



This project (i) focuses directly on racial differences in earnings, wealth, health, and program participation, and (ii) studies the policy implications of Social Security benefits taxation on racial disparities in wealth and program participation.

The current project leverages the Health and Retirement Survey (HRS) to inform the implications of Social Security taxation and related reforms on racial wealth and income disparities. We intend (i) to document the evolution of wealth by race, gender, and family structure, (ii) to characterize the joint distribution of Social Security benefits and other nonSocial Security income, and (iii) to estimate the effects of Social Security benefits taxation on wealth accumulation, racial disparities in wealth, and its inter-generational transfer. The HRS data includes several cohorts of pre-retirement and retirement age individuals across states with varying taxation of retirement benefits. Some of the cohorts overlap with time periods when the most glaring racial disparities in program design existed. Using trend data among more recent cohorts, we are able measure what if any lingering racially disparate effects remain under various policy scenarios currently under discussion by elected officials and policy analysts. The analysis permits the examination of exogenous shocks, e.g., the 2008 housing market crisis, the Great Recession, and precursors to the Covid-19 virus – where wealth accumulation may diverge across distributions of pre-retirees and retirees.

This project seeks to identify opportunities to make social security robust, bold, fair, and comprehensive through improved policy design.


Project Year