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Welfare for the Elderly: The Effects of SSI on Pre-Retirement Labor Supply

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Author Info
David Neumark
Elizabeth Powers

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Abstract

The elderly are one of the exceptional groups in American society with access to a significant cash safety net, a means-tested program called Supplemental Security Income (SSI). Little attention has been paid to the pre-eligibility-age labor market disincentives created by such a program. In particular, asset and income limits might induce individuals nearing the eligibility age to work less. There is little if any hard evidence on such incentive effects. We exploit variation in states' supplementation of the federal SSI benefit to estimate the effects of the SSI program on pre-retirement labor supply, using data from the 1984, 1990, and 1991 panels of the Survey of Income and Program Participation. We find some evidence that generous SSI benefits reduce the pre-retirement labor supply (and earnings) of men who are likely to participate in SSI after retirement as they near the eligibility age, especially that of men who have reached the age of eligibility for early Social Security benefits, which may be used to offset their reduced labor income.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6805.

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Date of creation: Nov 1998
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Handle: RePEc:nbr:nberwo:6805

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Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. 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. [Downloadable!] (restricted)
  2. 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.
    Other versions:
  3. Johnson, Richard W & Neumark, David, 1996. "Wage Declines among Older Men," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 740-48, November. [Downloadable!] (restricted)
  4. Olivia S. Mitchell & Stephen P. Zeldes, 1996. "Social Security Privatization: A Structure for Analysis," NBER Working Papers 5512, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Timothy Besley & Anne Case, 1994. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," NBER Working Papers 4956, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  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. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David Neumark & Elizabeth T. Powers, 2006. "SSI, Labor Supply, and Migration," Working Papers 050628, University of California-Irvine, Department of Economics. [Downloadable!]
    Other versions:
  2. David Neumark & Elizabeth T. Powers, 2003. "The Effects of Changes in State SSI Supplements on Pre-Retirement Labor Supply," NBER Working Papers 9851, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Elizabeth T. Powers & David Neumark, 2002. "The Supplemental Security Income Program And Incentives To Take Up Social Security Early Retirement: Empirical Evidence from Matched SIPP and Social Security Administrative Files," Working Papers, Center for Retirement Research at Boston College 2001-06, Center for Retirement Research. [Downloadable!]
  4. Elizabeth Powers & David Neumark, 2001. "The Supplemental Security Income Program and Incentives to Take Up Social Security Early Retirement: Empirical Evidence from Matched SIPP and Social.," NBER Working Papers 8670, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. 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. [Downloadable!]
  6. 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. [Downloadable!]
  7. David Neumark & Elizabeth Powers, 2006. "Supplemental security income, labor supply, and migration," Journal of Population Economics, Springer, vol. 19(3), pages 447-479, July. [Downloadable!] (restricted)
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