Social Security and the Decision to Retire
This study examines empirically whether social security influences the retirement decisions of individuals. The framework for this study is the life-cycle model of individual behavior. The life-cycle model shows that there are two main ways in which social security can affect behavior. One way is through the change in an individual's lifetime income that social security can bring about. The other way has to do with how the system changes compensation for work. Social security's income and substitution effects are included in a model for examining retirement decisions. This model is based on the model of labor force participation that has become standard in the literature on labor supply. The data used in this study come from the Social Security Administration and are particularly well suited for this study. Retirement models are estimated separately for samples of 62-64 and 65-70 year old men. The empirical results support the conclusion that social security influences the decision to retire. The magnitude of behavioral responses to changes in social security benefits are reported and implications for future behavior are discussed.
|Date of creation:||Aug 1981|
|Date of revision:|
|Publication status:||Published as "Social Security and Household Wealth Accumulation: New Microeconomic Evidence", Review of Economics and Statistics, Vol. 61, no. 3 (1979): 361-368.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
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.:
- Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- Campbell, Colin D & Campbell, Rosemary G, 1976. "Conflicting Views on the Effect of Old-Age and Survivors Insurance on Retirement," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 369-88, September.
- Alan Blinder & Yoram Weiss, 1974.
"Human Capital and Labor Supply: A Synthesis,"
435, Princeton University, Department of Economics, Industrial Relations Section..
- Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
- Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August.
- Feldstein, Martin & Liebman, Jeffrey B., 2002.
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324
- Reuben Gronau, 1974.
"The Effect of Children on the Housewife's Value of Time,"
in: Economics of the Family: Marriage, Children, and Human Capital, pages 457-490
National Bureau of Economic Research, Inc.
- Gronau, Reuben, 1973. "The Effect of Children on the Housewife's Value of Time," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S168-99, Part II, .
- Sheshinski, Eytan, 1978.
"A model of social security and retirement decisions,"
Journal of Public Economics,
Elsevier, vol. 10(3), pages 337-360, December.
- Eytan Sheshinski, 1977. "A Model of Social Security and Retirement Decisions," NBER Working Papers 0187, National Bureau of Economic Research, Inc.
- Jeremy I. Bulow, 1981. "Early Retirement Pension Benefits," NBER Working Papers 0654, National Bureau of Economic Research, Inc.
- Alan S. Blinder & Roger H. Gordon & Donald E. Wise, 1980. "Reconsidering the Work Disincentive Effects of Social Security," NBER Working Papers 0562, National Bureau of Economic Research, Inc.
- Anthony J. Pellechio, 1979. "The Estimation of Labor Supply Over Kinked Budget Constraints: Some New Econometric Methodology," NBER Working Papers 0387, National Bureau of Economic Research, Inc.
- Gronau, Reuben, 1977.
"Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited,"
Journal of Political Economy,
University of Chicago Press, vol. 85(6), pages 1099-1123, December.
- Reuben Gronau, 1976. "Leisure, Home Production and Work--The Theory of The Allocation of Time Revisited," NBER Working Papers 0137, National Bureau of Economic Research, Inc.
- P. A. Diamond & J. A. Mirrlees, 1977.
"A Model of Social Insurance With Variable Retirement,"
210, Massachusetts Institute of Technology (MIT), Department of Economics.
- Diamond, P. A. & Mirrlees, J. A., 1978. "A model of social insurance with variable retirement," Journal of Public Economics, Elsevier, vol. 10(3), pages 295-336, December.
- Olivia S. Mitchell & Gary S. Fields, 1981. "The Effects of Pensions and Earnings on Retirement: A Review Essay," NBER Working Papers 0772, National Bureau of Economic Research, Inc.
- Crawford, Vincent P & Lilien, David M, 1981. "Social Security and the Retirement Decision," The Quarterly Journal of Economics, MIT Press, vol. 96(3), pages 505-29, August.
- Boskin, Michael J, 1977. "Social Security and Retirement Decisions," Economic Inquiry, Western Economic Association International, vol. 15(1), pages 1-25, January.
- Samuelson, Paul A, 1975. "Optimum Social Security in a Life-Cycle Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 539-44, October.
- Kotlikoff, Laurence J, 1979. "Testing the Theory of Social Security and Life Cycle Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 396-410, June.
- Pellechio, Anthony J, 1979. "Social Security Financing and Retirement Behavior," American Economic Review, American Economic Association, vol. 69(2), pages 284-87, May.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0734. 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: ()
If references are entirely missing, you can add them using this form.