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Persistence In Labor Supply And The Response To The Social Security Earnings Test
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Book Synopsis Persistence in Labor Supply and the Response to the Social Security Earnings Test by : Leora Friedberg
Download or read book Persistence in Labor Supply and the Response to the Social Security Earnings Test written by Leora Friedberg and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact on labor supply of changes in the Social Security earnings test in 1996 and 2000. We highlight how the persistence of labor supply choices influences both responses to policy changes and the estimation of such responses. We do this in two ways. First, we use data from the Health and Retirement Study and the Current Population Survey that allows us to compare employment transitions across cohorts that are differentially affected by changes in the earnings test rules. We show that conditioning on last year's employment status is important in identifying responses to current earnings test changes. Second, we test the effect of not only current but also anticipated as well as past earnings test parameters which cohorts faced at earlier ages. We find that past and anticipated future rules influence current employment and earnings. Our results help to identify an effect of earnings test changes affecting ages 65-69 on employment at younger and older ages, which suggests caution about the use of neighboring age groups as control groups in analyzing responses to the earnings test. We also show that earnings test changes that were initiated in 1996 had an important effect, in addition to the changes in 2000 that have been extensively studied.
Book Synopsis Persistence in Labor Supply and the Response to the Social Security Earnings Test by : Leora Friedberg
Download or read book Persistence in Labor Supply and the Response to the Social Security Earnings Test written by Leora Friedberg and published by . This book was released on 2013 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact on labor supply of changes in the Social Security Earnings Test in 1996 and 2000. We highlight how the persistence of labor supply choices influences both responses to policy changes and the estimation of such responses. We do this in two ways. First, we use data from the Health and Retirement Study and the Current Population Survey that allows us to compare employment transitions across cohorts that are differentially affected by changes in the earnings test rules. We show that conditioning on last year's employment status is important in identifying responses to current earnings test changes. Second, we test the effect of not only current but also anticipated as well as past earnings test parameters which cohorts faced at earlier ages. We find that past and anticipated future rules influence current employment and earnings. Our results help to identify an effect of earnings test changes affecting ages 65-69 on employment at younger and older ages, which suggests caution about the use of neighboring age groups as control groups in analyzing responses to the earnings test. We also show that earnings test changes that were initiated in 1996 had an important effect, in addition to the changes in 2000 that have been extensively studied.
Book Synopsis Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt? by : Jonathan Gruber
Download or read book Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt? written by Jonathan Gruber and published by . This book was released on 2000 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Social Security earnings test, a version of which still applies to those ages 62-64, reduces immediate payments to beneficiaries whose labor income exceeds a given threshold. Although benefits are subsequently increased to compensate for any such reduction, the earnings test is typically perceived as a tax on working. As a result, it is considered by many to be an important disincentive to paid work for older Americans. Yet there is little evidence to suggest an economically significant effect of the earnings test on hours of work, and almost no research on the effect of the test on the decision to work at all. We investigate these issues using the significant changes in the structure of the earnings test over the past 25 years, using data over the past 25 years, using data over the 1973-1998 period from the March Supplement to the Current Population Survey (CPS), which provide large samples of observations on the elderly. Our analysis suggests two major conclusions. First, the earnings test exerts no robust influence on the labor supply decisions of men. Neither graphical analyses of breaks in labor supply trends, nor regression estimates that control for underlying trends in labor supply by age group, reveal any significant impact of changes in earnings test parameters on aggregate employment, hours of work, or earnings for men. For women, there is more suggestive evidence that the earnings test is affecting labor supply decisions. Second, loosening the earnings test appears to accelerate benefits receipt among the eligible population, lowering benefits levels, and heightening concerns about the standard of living of these elderly at very advanced ages. Our findings suggest some cause for caution before rushing to remove the earnings test at younger ages.
Book Synopsis The Labor Supply Effects of the Social Security Earnings Test by : Leora Friedberg
Download or read book The Labor Supply Effects of the Social Security Earnings Test written by Leora Friedberg and published by . This book was released on 1999 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Social Security earnings test reduces benefits at a 33-50% rate once earnings pass a threshold amount - among the highest marginal tax rates in the economy. Previous research dismissed the importance of the earnings test but failed to take advantage of three changes in the earnings test rules in order to identify its impact. Each change applied to some age groups and not others - which make them useful for identifying the effect of tax rules on the labor supply of working beneficiaries. Beneficiaries in the Current Population Survey satisfy the strongest prediction: many keep their earnings just below the exempt amount, and this bunching shifts with the earnings test rule changes. The rule changes are then incorporated into an econometric model of labor supply to identify income and substitution elasticities. The resulting elasticity estimates suggest considerable deadweight loss suffered by working beneficiaries. Simulations predict a substantial boost to labor supply from eliminating the earnings test, and at a minimal fiscal cost. However, a slight decrease in labor supply is predicted from the recently legislated increase in the exempt amount
Book Synopsis Labor Supply Responses to Marginal Social Security Benefits by : Jeffrey B. Liebman
Download or read book Labor Supply Responses to Marginal Social Security Benefits written by Jeffrey B. Liebman and published by . This book was released on 2008 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: A key question for Social Security reform is whether workers currently perceive the link on the margin between the Social Security taxes they pay and the Social Security benefits they will receive. We estimate the effects of the marginal Social Security benefits that accrue with additional earnings on three measures of labor supply: retirement, hours, and labor earnings. We develop a new approach to identifying these incentive effects by exploiting five provisions in the Social Security benefit rules that generate discontinuities in marginal benefits or non-linearities in marginal benefits that converge to discontinuities as uncertainty about the future is resolved. We find clear evidence that individuals approaching retirement (age 52 and older) respond to the Social Security tax-benefit link on the extensive margin of their labor supply decisions: we estimate that a 10 percent increase in the net-of-tax share reduces the two-year retirement hazard by a statistically significant 2.1 percentage points from a base rate of 15 percent. The evidence with regards to labor supply responses on the intensive margin is more mixed: we estimate that the elasticity of hours with respect to the net-of-tax share is 0.41 and statistically significant, but we do not find a statistically significant earnings elasticity.
Book Synopsis Labor Supply Responses to Marginal Social Security Benefits by : Jeffrey B. Liebman
Download or read book Labor Supply Responses to Marginal Social Security Benefits written by Jeffrey B. Liebman and published by . This book was released on 2010 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: A key question for Social Security reform is whether workers currently perceive the link on the margin between the Social Security taxes they pay and the Social Security benefits they will receive. We estimate the effects of the marginal Social Security benefits that accrue with additional earnings on three measures of labor supply: retirement, hours, and labor earnings. We develop a new approach to identifying these incentive effects by exploiting five provisions in the Social Security benefit rules that generate discontinuities in marginal benefits or non-linearities in marginal benefits that converge to discontinuities as uncertainty about the future is resolved. We find clear evidence that individuals approaching retirement (age 52 and older) respond to the Social Security tax-benefit link on the extensive margin of their labor supply decisions: we estimate that a 10 percent increase in the net-of-tax share reduces the two-year retirement hazard by a statistically significant 2.1 percentage points from a base rate of 15 percent. The evidence with regards to labor supply responses on the intensive margin is more mixed: we estimate that the elasticity of hours with respect to the net-of-tax share is 0.41 and statistically significant, but we do not find a statistically significant earnings elasticity.
Download or read book Wera Hans von (1933-?). written by and published by . This book was released on 1953 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Zeitungsausschnitte.
Book Synopsis Early Retirement, Labor Supply, and Benefit Withholding by : Hugo Benitez-Silva
Download or read book Early Retirement, Labor Supply, and Benefit Withholding written by Hugo Benitez-Silva and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The labor supply and benefit claiming incentives provided by the early retirement rules of the Social Security Old Age benefits program are of growing importance as the Normal Retirement Age (NRA) increases to 67, the labor force participation of Older Americans rises, and a variety of reforms to the Social Security system are considered. Any reform needs to take into account the effects and rationale of the Social Security Earnings Test and the Actuarial Adjustment Factor. We describe these incentives, and analyze benefit withholding patterns using data from the Master Beneficiary Files of the Social Security Administration, and present descriptive and exploratory evidence on the determinants of benefit withholding using data from the Health and Retirement Survey. We then investigate the importance of the Earnings Test limits for work and claiming behavior using a dynamic life-cycle model of labor supply, benefit claiming, and withholding. We use the latter framework to compare the consequences of a number of changes to the Earnings Test provision for the labor supply behavior and earnings of older Americans.
Book Synopsis The Social Security Earnings Test, Labor Supply Distortions, and Foregone Payroll Tax Revenues by :
Download or read book The Social Security Earnings Test, Labor Supply Distortions, and Foregone Payroll Tax Revenues written by and published by . This book was released on 1978 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study the social security earnings test is shown to have a significant effect empirically on the labor supply of retirement aged men. A rich data file from the Social Security Administration containing accurate benefit information provides a cross- section sample of 65-70 year old married men who worked some amount for empirical investigation. The data pertain to 1972. The results indicate that eliminating the earnings test would increase labor supply by 151 annual hours and payroll tax revenue by $31 per individual in the sample. The way in which the earnings test is relaxed is important also. Raising the exempt amount increased labor supply while lowering the tax rate did not. This follows from analyzing labor supply decisions over a nonlinear earnings-tested budget constraint. An econometric technique was developed for consistently estimating labor supply over nonlinear budget constraints. This technique conveniently summarized the budget constraint in an expected value calculation.
Book Synopsis Dynamic Models of Labor Supply and Retirement by :
Download or read book Dynamic Models of Labor Supply and Retirement written by and published by . This book was released on 2012 with total page 208 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three separate essays on the dynamic models of labor supply and retirement. The first essay documents "sharp retirement"--retirement accompanied by a discontinuous decline in labor supply--across three data sets, which previous literature found difficult to explain. I propose and estimate a life-cycle labor supply model with habit persistence wherein sharp retirement can be explained by workers quitting "cold turkey." The working habit model is consistent with the data, where workers reduce yearly labor supply by scaling back more in hours worked per week (over 50% reduction) than in weeks worked per year (20% reduction). The fixed costs approach cannot explain these trends. Counterfactuals show that reducing Social Security benefits by 20% causes individuals work an additional 8.6 months. Individuals choosing sharp retirement respond mostly on the extensive margin by delaying retirement eight months, while individuals choosing smooth retirement respond mostly on the intensive margin by increasing yearly labor supply and delaying retirement only one month. The second essay develops and estimates a Ben-Porath human capital model in which individuals make decisions on consumption, human capital investment, labor supply, and retirement, allowing both an endogenous wage process and an endogenous retirement decision. We estimate the model using the Method of Simulated Moments to match the life-cycle profiles of wages and hours from the PSID data. Counterfactuals of delaying NRA and removing Social Security earnings test show significant increases in one individual's human capital investment at old ages, which leads to over 20% increase in the wage profile near retirement. The third essay tests for asymmetric employer learning in the labor market using a three-period model with a match component of wages. When a worker makes her quit/stay decision in a labor market with three periods, she must consider the signaling effect of her decision in subsequent periods. This breaks down some implications derived from two-period models, which are mostly used in the empirical literature. I suggest two alternative hypothesis tests for asymmetric employer learning in the model. I use the NLSY79 Work-History data and find evidence of asymmetric employer learning from these tests.
Download or read book Social Security Bulletin written by and published by . This book was released on 1938 with total page 532 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Working Longer by : Alicia H. Munnell
Download or read book Working Longer written by Alicia H. Munnell and published by Rowman & Littlefield. This book was released on 2009-10-01 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt: Daily headlines warn American workers that their retirement years may be far from golden. The main components of the retirement income system—Social Security and employer-provided pensions and health insurance—are in decline while the amount of income needed for a comfortable retirement continues to rise. In Working Longer, Alicia Munnell and Steven Sass suggest a simple solution to this problem: postponing retirement by two to four years. By following their advice, the average worker retiring in 2030 can be as well off as today's retirees. Implementing this solution on a national scale, however, may not be simple. Working Longer investigates the prospects for moving the average retirement age from 63, the current figure, to 66. Munnell and Sass ask whether future generations will be healthy enough to work beyond the current retirement age and whether older men and women want to work. They examine companies' incentives to employ older works and ask what government can do to promote continued participation in the workforce. Finally, they consider the challenge of ensuring a secure retirement for low-wage workers and those who are unable to continue to work. The retirement system faces very real challenges. But together, workers, employers, and the government can keep this vital piece of the American dream alive.
Book Synopsis Labor Supply in the New Century by : Federal Reserve Bank of Boston. Economic Conference
Download or read book Labor Supply in the New Century written by Federal Reserve Bank of Boston. Economic Conference and published by . This book was released on 2008 with total page 414 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Social Security and the Changing Roles of Men and Women by : United States. Department of Health, Education, and Welfare
Download or read book Social Security and the Changing Roles of Men and Women written by United States. Department of Health, Education, and Welfare and published by . This book was released on 1979 with total page 370 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Labor Market and Economic Adjustment by : Pierre-Richard Agénor
Download or read book The Labor Market and Economic Adjustment written by Pierre-Richard Agénor and published by International Monetary Fund. This book was released on 1995-11-01 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.
Book Synopsis Conference Series by : Federal Reserve Bank of Boston
Download or read book Conference Series written by Federal Reserve Bank of Boston and published by . This book was released on 1969 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Social Security by : Larry W. DeWitt
Download or read book Social Security written by Larry W. DeWitt and published by CQ Press. This book was released on 2008 with total page 584 pages. Available in PDF, EPUB and Kindle. Book excerpt: A Documentary History tells the story of the creation and development of the U.S. Social Security program through primary source documents, from its antecendents and founding in 1935, to the controversial issues of the present. This unique reference presents the complex history of Social Security in an accessible volume that highlights the program's major moments and events.
