How did the Elimination of the Earnings Test above the Normal Retirement Age affect Retirement Expectations?

Pierre-Carl Michaud and Arthur van Soest ()

Social and Economic Dimensions of an Aging Population Research Papers from McMaster University

Abstract: We look at the effect of the 2000 repeal of the earnings test above the normal retirement age on retirement expectations of workers in the Health and Retirement Study, aged 51 to 61 in 1992. For men, we find that those whose marginal wage rate increased when the earnings test was repealed, had the largest increase in the probability to work full-time past normal retirement age. We do not find significant evidence of effects of the repeal of the earnings test on the probability to work past age 62 or the expected claiming age. On the other hand, for those reaching the normal retirement age, deviations between the age at which Social Security benefits are actually claimed and the previously reported expected age are more negative in 2000 than in 1998. Since our calculations show that the tax introduced by the earnings test was small when accounting for actuarial benefit adjustments and differential mortality, our results suggest that although male workers form expectations in a way consistent with forward-looking behavior, they misperceive the complicated rules of the earnings test. Results for females suggest similar patterns but estimates are imprecise.

Keywords: social security earnings test; expectations; retirement; difference in differences; panel data (search for similar items in EconPapers)
JEL-codes: H55 J22 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2007-02
New Economics Papers: this item is included in nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: How Did the Elimination of the Earnings Test above the Normal Retirement Age Affect Retirement Expectations? (2007)
Working Paper: How did the Elimination of the Earnings Test above the Normal Retirement Age affect Retirement Expectations? (2007)
Working Paper: How Did the Elimination of the Earnings Test Above the Normal Retirement Age Affect Retirement Expectations? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:sedapp:174

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