IDEAS home Printed from
   My bibliography  Save this paper

Social Security and Retirement Decisions


  • Michael J. Boskin


One of the most striking features of the postwar U.S. economy has been the rapid decrease in the labor force participation of the elderly at a time when the health of this group has been improving. In spite of this, previous research, based on retrospective interviews with the retired population, usually concludes that poor health accounts for the overwhelming majority of retirements. The current results suggest that nothing could be further from the truth. Using data from the Panel Study of Income Dynamics, we follow a cohort of white married males through their sixties to estimate a model of retirement behavior. Using several definitions of retirement suggested in the literature, the results suggest that the two key policy parameters of the social security system â€" the income guarantee and the implicit tax on earnings â€" exert an enormous influence on retirement decisions. For example, our results suggest that a decrease in the implicit tax rate on earnings from one-half to one-third would reduce the annual probability of retirement by almost sixty percent! Applying the coefficient estimates to time series data on the labor force participation of the elderly implies that the social security sys-tem has been the major factor in the explosion in earlier retirement.

Suggested Citation

  • Michael J. Boskin, 1975. "Social Security and Retirement Decisions," NBER Working Papers 0107, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0107
    Note: PE

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Feldstein, Martin S, 1972. "The Incidence of the Social Security Payroll Tax: Comment," American Economic Review, American Economic Association, vol. 62(4), pages 735-738, September.
    2. Brittain, John A, 1971. "The Incidence of Social Security Payroll Taxes," American Economic Review, American Economic Association, vol. 61(1), pages 110-125, March.
    3. Campbell, Colin D, 1969. "Social Insurance in the United States: A Program in Search of an Explanation," Journal of Law and Economics, University of Chicago Press, vol. 12(2), pages 249-265, October.
    4. Arnold Harberger, 1964. "Taxation, Resource Allocation, and Welfare," NBER Chapters,in: The Role of Direct and Indirect Taxes in the Federal Reserve System, pages 25-80 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. Sheshinski, Eytan, 1978. "A model of social security and retirement decisions," Journal of Public Economics, Elsevier, vol. 10(3), pages 337-360, December.

    More about this item


    Access and download statistics


    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:nbr:nberwo:0107. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.