IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/13016.html
   My bibliography  Save this paper

Revisiting the Labor Supply Effect of Social Security Earnings Test: New evidence from its elimination and reinstatement in Japan

Author

Listed:
  • SHIMIZUTANI Satoshi
  • OSHIO Takashi

Abstract

We explore the labor supply effect of the social security earnings test in Japan on those aged 65-69 years through a combined examination of the elimination of the earnings test in 1985 and its reinstatement in 2002. We present evidence showing that the effects of changes in the earnings test on the labor supply of the elderly are not symmetric, controlling for changes in the attributes of workers and firms. The repeal of the earnings test in 1985 did affect the earnings distribution of the elderly (especially for men), while its reinstatement in 2002 did not alter the earnings distribution.

Suggested Citation

  • SHIMIZUTANI Satoshi & OSHIO Takashi, 2013. "Revisiting the Labor Supply Effect of Social Security Earnings Test: New evidence from its elimination and reinstatement in Japan," Discussion papers 13016, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:13016
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/13e016.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Shimizutani, Satoshi & 清水谷, 諭 & シミズタニ, サトシ & Oshio, Takashi & 小塩, 隆士 & オシオ, タカシ, 2009. "New Evidence on Initial Transition from Career Job to Retirement in Japan," PIE/CIS Discussion Paper 430, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    2. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    3. Jonathan Gruber & David A. Wise, 2010. "Social Security Programs and Retirement around the World: The Relationship to Youth Employment," NBER Books, National Bureau of Economic Research, Inc, number grub08-1, March.
    4. Satoshi Shimizutani & Izumi Yokoyama, 2006. "Has Japan's Long-term employment Practice Survived? New Evidence Emerging Since the 1990s," Hi-Stat Discussion Paper Series d06-182, Institute of Economic Research, Hitotsubashi University.
    5. Satoshi Shimizutani, 2013. "Social Security Earnings Test and the Labour Supply of the Elderly: New Evidence from Unique Survey Responses in Japan," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 399-413, September.
    6. Satoshi Shimizutani & Izumi Yokoyama, 2009. "Has Japan's Long-Term Employment Practice Survived? Developments since the 1990S," ILR Review, Cornell University, ILR School, vol. 62(3), pages 313-326, April.
    7. Burtless, Gary & Moffitt, Robert A, 1985. "The Joint Choice of Retirement Age and Postretirement Hours of Work," Journal of Labor Economics, University of Chicago Press, vol. 3(2), pages 209-236, April.
    8. Takashi Oshio & Satoshi Shimizutani & Akiko Sato Oishi, 2010. "Does Social Security Induce Withdrawal of the Old from the Labor Force and Create Jobs for the Young? The Case of Japan," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 217-241, National Bureau of Economic Research, Inc.
    9. Leora Friedberg, 2000. "The Labor Supply Effects of the Social Security Earnings Test," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 48-63, February.
    10. Richard Disney & Sarah Smith, 2002. "The Labour Supply Effect of the Abolition of the Earnings Rule for Older Workers in the United Kingdom," Economic Journal, Royal Economic Society, vol. 112(478), pages 136-152, March.
    11. Shimizutani, Satoshi, 2011. "A new anatomy of the retirement process in Japan," Japan and the World Economy, Elsevier, vol. 23(3), pages 141-152.
    12. Gustman, Alan L & Steinmeier, Thomas L, 1985. "The 1983 Social Security Reforms and Labor Supply Adjustments of Older Individuals in the Long Run," Journal of Labor Economics, University of Chicago Press, vol. 3(2), pages 237-253, April.
    13. Baker, Michael & Benjamin, Dwayne, 1999. "How do retirement tests affect the labour supply of older men?," Journal of Public Economics, Elsevier, vol. 71(1), pages 27-51, January.
    14. Takashi Oshio & Akiko Sato Oishi & Satoshi Shimizutani, 2011. "Social Security Reforms And Labour Force Participation Of The Elderly In Japan," The Japanese Economic Review, Japanese Economic Association, vol. 62(2), pages 248-271, June.
    15. Gruber, Jonathan & Orszag, Peter, 2003. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," National Tax Journal, National Tax Association;National Tax Journal, vol. 56(4), pages 755-773, December.
    16. 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(4), pages 429-450, October.
    17. Steven J. Haider & David S. Loughran, 2008. "The Effect of the Social Security Earnings Test on Male Labor Supply: New Evidence from Survey and Administrative Data," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Satoshi Shimizutani & Takashi Oshio & Mayu Fujii, 2014. "Option Value of Work, Health Status, and Retirement Decisions in Japan: Evidence from the Japanese Study on Aging and Retirement (JSTAR)," NBER Chapters, in: Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, pages 497-535, National Bureau of Economic Research, Inc.
    2. Oshio, Takashi & Shimizutani, Satoshi, 2019. "Health capacity to work and its long-term trend among the Japanese elderly," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 76-86.
    3. Takashi Oshio & Akiko S. Oishi & Satoshi Shimizutani, 2018. "Social Security Programs and Elderly Employment in Japan," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 271-296, National Bureau of Economic Research, Inc.
    4. Hirono, Makoto & Mino, Kazuo, 2019. "Pension, Retirement, and Growth in the Presence Heterogeneous Elderly," MPRA Paper 98096, University Library of Munich, Germany.
    5. OSHIO Takashi & SHIMIZUTANI Satoshi & OISHI Akiko, 2019. "Addressing the Institutional Disincentives to Elderly Employment in Japan," Discussion papers 19080, Research Institute of Economy, Trade and Industry (RIETI).
    6. Tengjiao Chen & Yajie Sheng & Yu Xu, 2020. "The Anticipation Effect of the Earnings Test Reform on Younger Cohorts," Public Finance Review, , vol. 48(4), pages 387-424, July.
    7. OSHIO Takashi, 2018. "Health Capacity to Work and Its Long-term Trend among the Japanese Elderly," Discussion papers 18079, Research Institute of Economy, Trade and Industry (RIETI).
    8. Hernaes, Erik & Markussen, Simen & Piggott, John & Røed, Knut, 2015. "Pension Reform and Labor Supply: Flexibility vs. Prescription," IZA Discussion Papers 8812, Institute of Labor Economics (IZA).
    9. Francesca Caselli & Mr. Philippe Wingender, 2018. "Bunching at 3 Percent: The Maastricht Fiscal Criterion and Government Deficits," IMF Working Papers 2018/182, International Monetary Fund.
    10. Hirono, Makoto & Mino, Kazuo, 2020. "Pension Reforms, Population Aging, and Retirement Decision of the Elderly in a Neoclassical Growth Model," MPRA Paper 102467, University Library of Munich, Germany.
    11. Oshio, Takashi & Shimizutani, Satoshi & Oishi, Akiko S., 2020. "Examining how elderly employment is associated with institutional disincentives in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 56(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Satoshi Shimizutani, 2013. "Social Security Earnings Test and the Labour Supply of the Elderly: New Evidence from Unique Survey Responses in Japan," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 399-413, September.
    2. Shimizutani, Satoshi & 清水谷, 諭 & シミズタニ, サトシ & Oshio,Takashi & 小塩, 隆士 & オシオ, タカシ, 2008. "The Labor Supply Effect of Social Security Earnings Test Revisited: New Evidence from its Elimination and Revival in Japan," PIE/CIS Discussion Paper 410, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    3. Tengjiao Chen & Yajie Sheng & Yu Xu, 2020. "The Anticipation Effect of the Earnings Test Reform on Younger Cohorts," Public Finance Review, , vol. 48(4), pages 387-424, July.
    4. Shimizutani, Satoshi, 2011. "A new anatomy of the retirement process in Japan," Japan and the World Economy, Elsevier, vol. 23(3), pages 141-152.
    5. Itay Saporta-Eksten & Ity Shurtz & Sarit Weisburd, 2021. "Social Security, Labor Supply, and Health of Older Workers: Quasi-Experimental Evidence from a Large Reform [Identification and Estimation of Local Average Treatment Effects]," Journal of the European Economic Association, European Economic Association, vol. 19(4), pages 2168-2208.
    6. Bo MacInnis, 2009. "Social Security and the Joint Trends in Labor Supply and Benefits Receipt Among Older Men," Working Papers, Center for Retirement Research at Boston College wp2009-22, Center for Retirement Research, revised Oct 2009.
    7. Shimizutani, Satoshi & 清水谷, 諭 & Fujii, Mayu & 藤井, 麻由 & Oshio, Takashi & 小塩, 隆士, 2012. "Option Value of Work, Health Status, and Retirement Decisions: New Evidence from the Japanese Study on Aging and Retirement (JSTAR)," CIS Discussion paper series 566, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    8. David S. Loughran & Steven Haider, 2007. "Do the Elderly Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test," Working Papers 223-1, RAND Corporation.
    9. Laun, Lisa, 2017. "The effect of age-targeted tax credits on labor force participation of older workers," Journal of Public Economics, Elsevier, vol. 152(C), pages 102-118.
    10. Oshio, Takashi & Shimizutani, Satoshi & Oishi, Akiko S., 2020. "Examining how elderly employment is associated with institutional disincentives in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 56(C).
    11. ICHIMURA Hidehiko & SHIMIZUTANI Satoshi, 2011. "Retirement Process in Japan: New evidence from Japanese Study on Aging and Retirement (JSTAR)," Discussion papers 11080, Research Institute of Economy, Trade and Industry (RIETI).
    12. Song, Jae G. & Manchester, Joyce, 2007. "New evidence on earnings and benefit claims following changes in the retirement earnings test in 2000," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 669-700, April.
    13. Andersen, Asbjørn Goul & Markussen, Simen & Røed, Knut, 2021. "Pension reform and the efficiency-equity trade-off: Impacts of removing an early retirement subsidy," Labour Economics, Elsevier, vol. 72(C).
    14. Malkova, Olga, 2020. "Did Soviet elderly employment respond to financial incentives? Evidence from pension reforms," Journal of Public Economics, Elsevier, vol. 182(C).
    15. Hernæs, Erik & Markussen, Simen & Piggott, John & Røed, Knut, 2016. "Pension reform and labor supply," Journal of Public Economics, Elsevier, vol. 142(C), pages 39-55.
    16. Leonard E. Burman & Norma B. Coe & Kevin Pierce & Liu Tian, 2014. "The Effects of the Taxation of Social Security Benefits on Older Workers’ Income and Claiming Decisions," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 459-486, June.
    17. Hernaes, Erik & Markussen, Simen & Piggott, John & Røed, Knut, 2015. "Pension Reform and Labor Supply: Flexibility vs. Prescription," IZA Discussion Papers 8812, Institute of Labor Economics (IZA).
    18. David S Loughran & Steven Haider, 2007. "Do Elderly Men Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test," Working Papers WR-223-1, RAND Corporation.
    19. Hugo Benitez-Silva & Frank Heiland, 2008. "Early Retirement, Labor Supply, and Benefit Withholding: The Role of the Social Security Earnings Test," Working Papers wp183, University of Michigan, Michigan Retirement Research Center.
    20. Jesse Bricker & Gary V. Engelhardt, 2007. "Measurement Error in Earnings Data in the Health and Retirement Study," Working Papers, Center for Retirement Research at Boston College wp2007-16, Center for Retirement Research, revised Oct 2007.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:13016. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.