Does the Social Security earnings test affect labor supply and benefits receipt?

Gruber

Jonathan

Gruber, Jonathan

Author

Orszag

Peter

Orszag, Peter

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20002000monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2000

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

On April 7, 2000, President Clinton signed into law the Senior Citizens Freedom to Work Act of 2000, which eliminated the unpopular earnings test that applied to those over the Social Security normal age of retirement (currently age 65). The earnings test, a version of which still applies to those ages 62-64, reduces immediate payments to beneficiaries whose labor income exceeds a given threshold. Although benefits are subsequently increased to compensate for any such reduction, the earnings test is typically viewed as a tax on working. As a result, it is commonly viewed as an important disincentive to paid work for older Americans. For example, when President Clinton signed the legislation that removed the earnings test for beneficiaries at or above the normal retirement age, he noted, because of the Social Security retirement earnings test, the system withholds benefits from over 800,000 older working Americans and discourages countless more no one knows how many from actually seeking work. Similarly, Alan Greenspan recently stated that with the elimination of the earning test, the presumption, of course, is that you'll get an increase in the number of retired people coming back into the work force....

Jonathan Gruber and Peter Orszag.

CRR WP2000-7

CRR WP

2000-7

http://crr.bc.edu/images/stories/Working_Papers/wp_2000-07.pdf

MChBEnglisheng

MChB

Englisheng

English

eng