K. P. KANNAN, Center for Development Studies
Email: kpkannan@vsnl.com

The main burden of the paper is to argue for enlarging both the concept and the coverage of social security, especially in developing countries, to address the twin problems of deficiency and adversity. The two parts of this enlarged concept of social security are Basic Social Security (BSS) and Contingent Social Security (CSS). To strengthen the argument, lessons have been highlighted from the historical experience of Western countries, where the State played a leading role. Having argued for the extension of BSS, the paper also deals with the extension of CSS. This is best done through the informal economy, which employs a large majority of workers in developing countries. While the primacy of the State has been highlighted, the paper develops a typology of various social security models that could be used to study and understand the existing arrangements as well as the potentialities for extension.

WOUTER VAN GINNEKEN, International Labour Office
Email: ginneken@ilo.org

This article reviews the experience of some key low-, middle- and high-income countries that have successfully extended social security coverage or are in the process of doing so. It shows that a strong and competent State is a first requirement for the extension of social security. It also examines a variety of coverage indicators that can help national and international policymakers to focus their efforts on the extension of social security. Finally, it documents the growing use of tax-financed social pensions, and discusses some policy issues with regard to the link between tax-financed and contributory social security schemes.

ISABELA MARES, Columbia University - Department of Political Science
Email: im2195@columbia.edu

What are the economic and employment consequences of larger social insurance programmes? Are larger welfare states diverting resources from economic activity and distorting the investment decisions of firms? I examine theoretical and empirical research on the economic consequences of the welfare state. This review shows that the predictions of a negative relationship between higher levels of social protection and growth have not been borne out in the data. Both insurance programmes and other policies that increase investment in human capital or the overall productivity of workers generate important economic externalities that outweigh the potentially distortionary effects of higher taxes. Empirical studies also fail to uncover a consistent negative relationship between larger welfare states and the level of employment. The employment consequences of the welfare state are mediated by existing institutions and policies - such as the level of centralization of the wage bargaining system - which affect the redistribution of the costs of higher taxes among workers and firms. As a result, the employment consequences of larger welfare states are non-linear.

RODDY MCKINNON, International Social Security Association
Email: mckinnon@ilo.org

The developmental path of social security organizations has typically been one of incremental but steady adaptation in order to realize improvements in organizational performance and desired social security programme outcomes. In the evolving context of ageing society and globalization, there is increasing pressure for further and more rapid adaptation. To this end, this article proposes a unifying framework for action to help all social security organizations better realize improvements in performance and desired programme outcomes. This proposed framework is called "dynamic social security". By seeking to link social security organizations' aspirations and actions more closely and positively with those of economies and society, the aim is to help better realize, at least, a basic level of social security for all.

RICHARD G. ANDERSON, Federal Reserve Bank of St. Louis - Research Division
Email: ANDERSON@STLS.FRB.ORG
CHARLES S. GASCON, Federal Reserve Bank of St. Louis
Email: charles.s.gascon@stls.frb.org

The fear of offshoring, particularly in services since 2000, has raised workers economic insecurity and heightened concerns over future economic globalization. Many have argued that globalization has exacerbated labor market turbulence increasing the demand for social insurance programs. The authors present a simple theoretical model establishing a connection between the threat of offshoring, economic insecurity, and the demand for social insurance. Data from the 1972-2006 General Social Survey to provides supporting empirical evidence.

KATHRYN L. MOORE, University of Kentucky College of Law
Email: kmoore@pop.uky.edu

This article describes and analyzes the costs and benefits of a three-part Social Security reform proposal introduced by Robert Ball and endorsed by Nancy Altman. The Ball/Altman proposal consists of (1) gradually increasing the maximum earnings base until it reaches 90 percent of earnings; (2) dedicating the estate tax to funding Social Security beginning in 2010; and (3) investing a portion of the Social Security trust fund in equities. The article concludes that while the Ball/Altman proposed solution is not costless, it deserves serious consideration.

JEFFREY R. BROWN, University of Illinois at Urbana-Champaign - Department of Finance, National Bureau of Economic Research (NBER)
Email: brownjr@uiuc.edu
MARCUS D. CASEY, Affiliation Unknown
OLIVIA S. MITCHELL, University of Pennsylvania - Insurance & Risk Management Department, National Bureau of Economic Research (NBER)
Email: mitchelo@wharton.upenn.edu

We examine individuals' self-reported willingness to exchange part of their Social Security inflation-indexed annuity benefit for an immediate lump-sum payment, using an experimental module in the 2004 Health and Retirement Study. Our first finding is that nearly three out of five respondents favor the lump-sum payment if it were approximately actuarially fair, a finding that casts doubt on several leading explanations for why more people do not annuitize. Second, there is some modest price sensitivity and evidence consistent with adverse selection; in particular, people in better health and having more optimistic longevity expectations are more likely to choose the annuity. Third, after controlling on education, more financially literate individuals prefer the annuity. Fourth, people anticipating future Social Security benefit reductions are more likely to choose the lump-sum, suggesting that political risk matters. Other factors such as sex, marital status, income, wealth, or the presence of children are not associated with respondents' relative preferences for the annuity versus the lump-sum.