The Impact of Social Security and Other Factors on the Distribution of Wealth

Jagadeesh Gokhale and Laurence J. Kotlikoff

in The Distributional Aspects of Social Security and Social Security Reform

Published by University of Chicago Press

Published in print June 2002 | ISBN: 9780226241067
Published online February 2013 | e-ISBN: 9780226241890 | DOI:
The Impact of Social Security and Other Factors on the Distribution of Wealth

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This chapter describes the distribution of wealth. Wealth inequality exists in the absence of skill inequality, which is due to differences across households in the number of timing of their children and in the rates of return earned on their saving. Moreover, the role of inheritances and social security in wealth inequality is discussed. Social Security aggravates wealth inequality by giving the lifetime poor with proportionately less to save, less reason to save, and a larger share of their old-age resources in a nonbequeathable form than the lifetime rich. Social Security seems to be raising wealth inequality, as measured by the Gini coefficient, by roughly one-fifth, substantially increasing the share of total wealth held by the richest members of society, and greatly reducing the flow of bequests to the next generation.

Keywords: wealth inequality; Social Security; skill inequality; inheritances; Gini coefficient

Chapter.  12719 words.  Illustrated.

Subjects: Public Economics

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