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The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation

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  • Krueger, Alan B
  • Pischke, Jorn-Steffen

Abstract

This article uses aggregate birth year/calendar year level data derived from the Current Population Survey to estimate the effect of Social Security wealth on the labor supply of older men in the 1970s and 1980s. The analysis focuses on measuring the impact of the 1977 amendments to the Social Security Act, which created a substantial, unanticipated reduction in Social Security wealth for individuals born after 1916. This differential in benefits has become known as the benefit notch. Results indicate that labor supply continued to decline for the "notch babies" who received lower Social Security benefits than earlier cohorts. Copyright 1992 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 10 (1992)
Issue (Month): 4 (October)
Pages: 412-37

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Handle: RePEc:ucp:jlabec:v:10:y:1992:i:4:p:412-37

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  1. Anthony J. Pellechio, 1981. "Social Security and the Decision to Retire," NBER Working Papers 0734, National Bureau of Economic Research, Inc.
  2. Boskin, Michael J, 1977. "Social Security and Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 15(1), pages 1-25, January.
  3. Hanoch, Giora & Honig, Marjorie, 1978. "The labor supply curve under income maintenance programs," Journal of Public Economics, Elsevier, vol. 9(1), pages 1-16, February.
  4. Kathryn Anderson & Richard V. Burkhauser & Joseph F. Quinn, 1986. "Do retirement dreams come true? The effect of unanticipated events on retirement plans," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 518-526, July.
  5. Pellechio, Anthony J, 1979. "Social Security Financing and Retirement Behavior," American Economic Review, American Economic Association, vol. 69(2), pages 284-87, May.
  6. Kahn, James A., 1988. "Social security, liquidity, and early retirement," Journal of Public Economics, Elsevier, vol. 35(1), pages 97-117, February.
  7. Michael D. Hurd & Michael J. Boskin, 1985. "The Effect of Social Security on Retirement in the Early 1970s," NBER Working Papers 0659, National Bureau of Economic Research, Inc.
  8. B. Douglas Bernheim, 1987. "Social Security Benefits: An Empirical Study of Expectations and Realizations," NBER Working Papers 2257, National Bureau of Economic Research, Inc.
  9. Alan S. Blinder & Roger H. Gordon & Donald E. Wise, 1981. "Reconsidering the Work Disincentive Effects of Social Security," NBER Working Papers 0562, National Bureau of Economic Research, Inc.
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