Adjusting the Payroll Tax to Promote Longer Careers

47 Pages Posted: 30 Oct 2017

See all articles by John Laitner

John Laitner

University of Michigan at Ann Arbor - Department of Economics

Dan Silverman

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: September 26, 2017

Abstract

This paper analyzes a prospective Social Security reform that a number of authors have suggested, namely a payroll tax cut targeted on households near retirement. Our approach uses simulations of a life-cycle model, which we estimate from panel data. The simulations study effects on the labor force participation of older households. This paper specifically attempts to improve estimates of the model by incorporating newly available data, using both retirement and wealth accumulation data, and employing a formulation that avoids local optima to isolate only global maxima. Despite the changes, our results are generally consistent with earlier work, though they point to slightly more limited policy benefits.

Keywords: Payroll Tax, Social Security, Solvency

Suggested Citation

Laitner, John P. and Silverman, Dan, Adjusting the Payroll Tax to Promote Longer Careers (September 26, 2017). Michigan Retirement Research Center Research Paper No. 2017-363, Available at SSRN: https://ssrn.com/abstract=3043266 or http://dx.doi.org/10.2139/ssrn.3043266

John P. Laitner (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-763-9620 (Phone)
734-763-6866 (Fax)

Dan Silverman

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

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