The Automatic Stabilizing Effects of Social Security and 401(k) Plans 

Teresa GhilarducciJoelle Saad-LesslerEloy Fisher
Written By SCEPA

RELAB WORKING PAPER

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This study is a comparative analysis of how large pension institutions, such as Social Security and market-based 401(k) plans, impact the long-term business cycle.

It finds that 401(k) plans magnify the effects of the recession by de-stabilizing the economy. In fact, they significantly undermine the benefits of other stabilizing programs by 15%, including the federal income tax, unemployment insurance, and Medicare and disability insurance.

SCEPA
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