Lunch seminar “How Have People in the U.S. Responded to the Elimination of the Earnings Test and Increases in the Full Retirement Age?”

by Jae Song and Joyce Manchester (Office of Policy, U.S. Social Security Administration).

09 March 2007; h: 12:00

Collegio Carlo Alberto

The presentation will focus on 2 recent works by Song and Manchester:

1)New evidence on earnings and benefit claims following changes in the retirement earnings test in 2000

Abstract: This paper examines the labor force activity of workers aged 65-69 in response to the removal of the retirement earnings test in the year 2000. We use the one-percent sample of Social Security administrative data that covers the period from four years prior to four years following the removal of the test. Using a reduced-form quantile regression method, we find that effects are limited to earnings levels just around the test threshold and above, as predicted by economic theory. Our estimated effects suggest that labor supply elasticities with respect to the net of tax rate range from 0.06 to 0.12 among those aged 65-69.  Further, results show that work participation increased between 1 and 2 percentage points after the removal, and that most of those increases are attributable to retaining older workers rather than inducing older workers back into the work force.

2) Have People Delayed Claiming Retirement Benefits? Responses to Changes in Social Security Rules

This paper examines changes in the age at which people claim Social Security retirement benefits in the United States in response to two recent rule changes: the removal of the retirement earnings test at ages 65 to 69 in 2000 and the gradual increase in the full retirement age (FRA) beginning in 2000. Data come from the one-percent sample of Social Security administrative data for years 1997-2005. Descriptive and regression analyses show that the largest effect of the 2000 earnings test rule change occurs at age 65; at that age, the proportion of people who claim retirement benefits increases by about 4 percentage points among men and 2 percentage points among women. In addition, response to the gradual increase in the FRA occurs not only among those who are close to the FRA but also among those who are close to the early retirement age.

Silvia Maero
0039 011 6705040
0039 011 6705042