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The Effect of Old Age Assistance on Retirement

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  • Leora Friedberg

Abstract

Researchers have devoted considerable attention to analyzing the impact of Social Security on retirement, with mixed findings. However, Old Age Assistance (OAA), a means-tested program established at the same time, dwarfed Social Security until the 1950s and coincided with the early decline in elderly participation. In addition, OAA benefit levels were determined by the states - a key source of policy variation that is missing in the case of Social Security. I estimate the relationship between OAA benefit levels and elderly labor force participation using individual data from the 1940 and 1950 Censuses. The effect of OAA is found to be strong and implies that participation would have risen slightly instead of falling if benefits had not been raised during the 1940s. I also present evidence against the endogeneity of state benefit levels.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6548.

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Date of creation: May 1998
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Publication status: published as Journal of Public Economics, Vol. 71, no. 2 (February 1999): 213-252.
Handle: RePEc:nbr:nberwo:6548

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  1. Robin L. Lumsdaine & David A. Wise, 1994. "Aging and Labor Force Participation: A Review of Trends and Explanations," NBER Chapters, in: Aging in the United States and Japan: Economic Trends, pages 7-42 National Bureau of Economic Research, Inc.
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Cited by:
  1. Stoian, Adrian & Fishback, Price, 2010. "Welfare spending and mortality rates for the elderly before the Social Security era," Explorations in Economic History, Elsevier, vol. 47(1), pages 1-27, January.
  2. Disney, Richard & Whitehouse, Edward, 1999. "Pension plans and retirement incentives," Social Protection Discussion Papers 20851, The World Bank.
  3. Conway, Karen Smith & Rork, Jonathan C., 2012. "The Genesis Of Senior Income Tax Breaks," National Tax Journal, National Tax Association, vol. 65(4), pages 1043-68, December.
  4. Price V. Fishback & John Joseph Wallis, 2012. "What Was New About the New Deal?," NBER Working Papers 18271, National Bureau of Economic Research, Inc.
  5. Price V. Fishback & Samuel Allen & Jonathan Fox & Brendan Livingston, 2010. "A Patchwork Safety Net: A Survey of Cliometric Studies of Income Maintenance Programs in the United States in the First Half of the Twentieth Century," NBER Working Papers 15696, National Bureau of Economic Research, Inc.
  6. Olivia S. Mitchell & John W. R. Phillips, 2000. "Retirement Responses to Early Social Security Benefit Reductions," Working Papers wp006, University of Michigan, Michigan Retirement Research Center.
  7. Andreea Balan-Cohen, 2008. "Healthy, Wealthy, and Wise? The Impact of the Old Age Assistance Program on Elderly Mortality in the United States," Discussion Papers Series, Department of Economics, Tufts University 0719, Department of Economics, Tufts University.
  8. Dora L. Costa, 2008. "The Rise of Retirement Among African Americans: Wealth and Social Security Effects," NBER Working Papers 14462, National Bureau of Economic Research, Inc.
  9. Price V. Fishback, 2012. "Relief During the Great Depression in Australia and America," CEH Discussion Papers 005, Centre for Economic History, Research School of Economics, Australian National University.
  10. Richard Johnson, 2000. "The effect of old-age insurance on male retirement : evidence from historical cross-country data," Research Working Paper RWP 00-09, Federal Reserve Bank of Kansas City.

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