“Social Security and Elderly Workers’ Labor Supply: A New Look at the Notch Cohorts” by James P. VERE
James P. VERE
The University of Hong Kong
This study uses panel data from the Health and Retirement Survey (HRS) to calculate the effects of Social Security income on elderly labor supply in the 1990s and early 2000s. The identification strategy takes advantage of the 1977 amendments to the Social Security Act, which led to a large, unanticipated reduction in Social Security benefits for those born after January 1, 1917. Unlike studies focusing on earlier years, this paper finds a significant, negative relationship between elderly labor supply and Social Security income. This suggests that currently-proposed reductions in benefits would induce Social Security recipients to delay retirement or work more hours in retirement.