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The Effects of Changes in State SSI Supplements on Preretirement Labor Supply

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Author Info

  • David Neumark

    (Public Policy Institute of California and National Bureau of Economic Research)

  • Elizabeth T. Powers

    (University of Illinois at Urbana-Champaign)

Abstract

Because the Supplemental Security Income (SSI) program has both income limits and asset limits, those on the margin of eligibility for the elderly component of the program face incentives to reduce labor supply prior to becoming eligible. The authors’ past research relying on cross-state variation in SSI benefits found evidence of negative labor supply effects. However, a reliance on cross-state variation implied less than ideal control samples. In contrast, this article uses CPS data covering a twenty-two-year period, which permits identifying the effects of SSI from within-state, time-series variation in SSI benefits, using a better control sample. The evidence points consistently to negative effects of more generous SSI payments on the labor supply of likely SSI participants aged sixty-two to sixty-four. For those with a high probability of SSI participation, the implied elasticities of employment and hours with respect to benefits are generally in the range of -0.2 to -0.3.

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Bibliographic Info

Article provided by in its journal Public Finance Review.

Volume (Year): 33 (2005)
Issue (Month): 1 (January)
Pages: 3-35

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Handle: RePEc:sae:pubfin:v:33:y:2005:i:1:p:3-35

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Keywords: SSI; labor supply;

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References

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  1. Mitchell, Olivia S, 1988. "Worker Knowledge of Pension Provisions," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 21-39, January.
  2. Neumark, David & Powers, Elizabeth, 2000. "Welfare for the elderly: the effects of SSI on pre-retirement labor supply," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 51-80, October.
  3. Elizabeth T. Powers & David Neumark, 2003. "The Supplemental Security Income Program and Incentives to Claim Social Security Retirement Early: Empirical Evidence from Matched SIPP and Social Security Administrative Files," Working Papers wp036, University of Michigan, Michigan Retirement Research Center.
  4. Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 3-95, Wharton School Rodney L. White Center for Financial Research.
  5. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc.
  6. David Neumark & Elizabeth Powers, 1997. "The Effect of Means-Tested Income Support for the Elderly on Pre-Retirement Saving: Evidence from the SSI Program in the U.S," NBER Working Papers 6303, National Bureau of Economic Research, Inc.
  7. Sanders Korenman & David Neumark, 1991. "Does Marriage Really Make Men More Productive?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 282-307.
  8. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
  9. Daniel, K., 1991. "Does Marriage Make Men More Productive?," University of Chicago - Economics Research Center 92-2, Chicago - Economics Research Center.
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Citations

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Cited by:
  1. Hugo Benítez-Silva & Richard Disney & Sergi Jiménez Martín, 2009. "Disability, Capacity for Work and the Business Cycle: An International Perspective," Working Papers 2009-28, FEDEA.
  2. Neumark, David & Powers, Elizabeth T., 2005. "SSI, Labor Supply, and Migration," IZA Discussion Papers 1820, Institute for the Study of Labor (IZA).
  3. David Neumark & Elizabeth Powers, 2006. "Supplemental security income, labor supply, and migration," Journal of Population Economics, Springer, vol. 19(3), pages 447-479, July.

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