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The Effects of Changes in State SSI Supplements on Preretirement Labor Supply

Author

Listed:
  • David Neumark

    (Public Policy Institute of California and National Bureau of Economic Research)

  • Elizabeth T. Powers

    (University of Illinois at Urbana-Champaign)

Abstract

Because the Supplemental Security Income (SSI) program has both income limits and asset limits, those on the margin of eligibility for the elderly component of the program face incentives to reduce labor supply prior to becoming eligible. The authors’ past research relying on cross-state variation in SSI benefits found evidence of negative labor supply effects. However, a reliance on cross-state variation implied less than ideal control samples. In contrast, this article uses CPS data covering a twenty-two-year period, which permits identifying the effects of SSI from within-state, time-series variation in SSI benefits, using a better control sample. The evidence points consistently to negative effects of more generous SSI payments on the labor supply of likely SSI participants aged sixty-two to sixty-four. For those with a high probability of SSI participation, the implied elasticities of employment and hours with respect to benefits are generally in the range of -0.2 to -0.3.

Suggested Citation

  • David Neumark & Elizabeth T. Powers, 2005. "The Effects of Changes in State SSI Supplements on Preretirement Labor Supply," Public Finance Review, , vol. 33(1), pages 3-35, January.
  • Handle: RePEc:sae:pubfin:v:33:y:2005:i:1:p:3-35
    DOI: 10.1177/1091142104270655
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    References listed on IDEAS

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    Cited by:

    1. Hugo Benítez-Silva & Richard Disney & Sergi Jiménez-Martín, 2010. "Disability, capacity for work and the business cycle: an international perspective [Has the boom in incapacity benefit claimant numbers passed its peak?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 25(63), pages 483-536.
    2. Oskari Juurikkala, 2008. "Punishing The Poor: A Critique Of Means‐Tested Retirement Benefits," Economic Affairs, Wiley Blackwell, vol. 28(1), pages 11-16, March.
    3. Neumark, David & Powers, Elizabeth T., 2005. "SSI, Labor Supply, and Migration," IZA Discussion Papers 1820, Institute of Labor Economics (IZA).
    4. Goodman-Bacon, Andrew & Schmidt, Lucie, 2020. "Federalizing benefits: The introduction of Supplemental Security Income and the size of the safety net," Journal of Public Economics, Elsevier, vol. 185(C).
    5. Hugo Benitez-Silva & Moshe Buchinsky & John Rust, 2005. "Induced Entry Effects of a $1 for $2 Offset in SSDI Benefits," Department of Economics Working Papers 05-03, Stony Brook University, Department of Economics.
    6. David Neumark & Elizabeth Powers, 2006. "Supplemental security income, labor supply, and migration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(3), pages 447-479, July.

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    More about this item

    Keywords

    SSI; labor supply;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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