When looking at Social Security benefits per household, rather than per individual, a new study shows that the wage gap between men and women wipes out a lot of the “progressive” formula used to address income inequality. A new National Bureau of Economic Research working paper, reports the following:
Studies using data from the early 1990s suggested that while the progressive Social Security benefit formula succeeded in redistributing benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives.
To see whether growth in women’s workforce participation and earning would make a difference in redistribution on the household level, the researchers then tried to compare these outcomes from the 1990s with a group born in the 21st century. With little change, the basic trend persisted: The gender gap meant that Social Security still proved better at redistributing benefits between individuals, particularly from men to women, than reducing inequality between rich and poor households.
Have you felt the impact of the gender gap on your Social Security benefits?
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