The Repeal of the Retirement Earnings Test and the Labor Supply of Older Men
AbstractThis paper examines the impact of the Senior Citizens Freedom to Work Act of 2000, which abolished the Social Security retirement earnings test for those aged 65-69, on the labor supply of older men using data from the 1996-2004 waves of the Health and Retirement Study (HRS). Based on reduced-form specifications, we find that the repeal of the earnings test increased labor supply on the intensive margin by 12-17%, the bulk of which was concentrated among men with a high-school degree, whose labor supply rose by 19-26%. We formulate a unique test for endogenous reporting of health status by examining how reported health changes with the repeal of the earnings test. We find some evidence of endogenous self-reported health status. In particular, older men were substantially less likely to have reported that health limits their ability to work after, relative to before the earnings test repeal, with the bulk of the effect concentrated among men with high-school degrees, who had the largest labor-supply response to the repeal.
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Bibliographic InfoPaper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2007-01.
Length: 29 pages
Date of creation: May 2007
Date of revision: May 2007
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More information through EDIRC
retirement earnings test; labor supply; older men; aging;
Other versions of this item:
- Engelhardt, Gary V. & Kumar, Anil, 2009. "The repeal of the retirement earnings test and the labor supply of older men," Journal of Pension Economics and Finance, Cambridge University Press, vol. 8(04), pages 429-450, October.
- NEP-AGE-2007-08-08 (Economics of Ageing)
- NEP-ALL-2007-08-08 (All new papers)
- NEP-LAB-2007-08-08 (Labour Economics)
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