The distributional effects of the Social Security windfall elimination provision

Jeffrey R. Brown, Scott J. Weisbenner

Research output: Contribution to journalArticlepeer-review


Over five million state and local government employees have lifetime earnings that are divided between employment that is covered by the Social Security system and employment that is not covered. As Social Security benefits are a nonlinear function of covered lifetime earnings, the simple application of the standard benefit formula to covered earnings only would provide a higher replacement rate on those earnings than is appropriate given the individuals' total (covered plus uncovered) lifetime earnings. The Windfall Elimination Provision (WEP), established in 1983, is intended to correct this situation by applying a modified benefit formula to earnings of individuals with non-covered employment. This paper analyzes the distributional implications of the WEP and finds that it reduces benefits disproportionately for individuals with lower lifetime covered earnings. It discusses an alternative method of calculating the WEP that comes closer to preserving the intended redistribution of the system. In recognition of historical data limitations that prevent the Social Security Administration (SSA) from being able to implement this alternative method at present, the paper also analyzes two alternative ways of calculating the WEP that use the same information as the current WEP, are budget neutral, and come closer to maintaining the individual-level, cross-sectional progressivity of Social Security than does the existing WEP formula.

Original languageEnglish (US)
Pages (from-to)415-434
Number of pages20
JournalJournal of Pension Economics and Finance
Issue number4
StatePublished - Oct 2013


  • Social Security
  • WEP
  • retirement
  • state and local public pensions
  • windfall elimination provision

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management


Dive into the research topics of 'The distributional effects of the Social Security windfall elimination provision'. Together they form a unique fingerprint.

Cite this