Do the Elderly Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test

Loughran, David; Haider, Steven J.

doi:10.2139/ssrn.754428

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Do the Elderly Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test

RAND Working Paper Series No. WR-223

50 Pages Posted: 11 Jul 2005

See all articles by David Loughran

Steven J. Haider

Michigan State University - Department of Economics; IZA Institute of Labor Economics

Date Written: January 2005

Abstract

The effective tax on earnings embodied in the Social Security retirement earnings test has been as high as 50 percent. Surprisingly, among the numerous empirical studies that have examined the earnings test, there is little agreement about whether the earnings test affects elderly labor supply at all. This paper examines new and reconsiders existing empirical evidence on the earnings test and conclude that, at least for men, the earnings test has a substantial impact on labor supply and claiming behavior.

Keywords: Postemployment benefits, aged, age and employment, old age, labor supply

JEL Classification: E24, H20, H55, J14

Suggested Citation: Suggested Citation

Loughran, David and Haider, Steven J., Do the Elderly Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test (January 2005). RAND Working Paper Series No. WR-223, Available at SSRN: https://ssrn.com/abstract=754428 or http://dx.doi.org/10.2139/ssrn.754428