How Important are Wages to the Elderly?

Published: 2002
Project ID: UM02-09


More than 40 percent of Social Security beneficiaries continue to work after age 65. This research investigates the extent to which these individuals substitute labor across periods in response to anticipated wage changes induced by the Social Security earnings test. While we find that a disproportionate number of individuals choose earnings within a few percentage points of the earnings limit, we find no evidence that these individuals substitute labor supply between ages 69 and 70 when, in our sample, the tax on earnings falls from 50 percent to zero.


Steven Haider