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Labor Supply Effects of the Recent Social Security Benefit Cuts: Empirical Estimates Using Cohort Discontinuities

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  • Giovanni Mastrobuoni

    (Princeton University)

Abstract

In response to a "crisis" in Social Security financing two decades ago Congress implemented an increase in the Normal Retirement Age (NRA) of 2Â months per year for cohorts born in 1938 and after. These cohorts began reaching retirement age in 2000. This paper studies the effects of these benefit cuts on recent retirement behavior. The evidence suggests that the mean retirement age of the affected cohorts has increased by about half as much as the increase in the NRA. If older workers continue to increase their labor supply in the same way, there might be important implications for the estimates of Social Security trust fund exhaustion that have played such a major role in recent discussions of Social Security reform.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Giovanni Mastrobuoni, 2006. "Labor Supply Effects of the Recent Social Security Benefit Cuts: Empirical Estimates Using Cohort Discontinuities," Working Papers 893, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:514
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    References listed on IDEAS

    as
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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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