Government Old-Age Support and Labor Supply: Evidence from the Old Age Assistance Program

Daniel Fetter and Lee Lockwood

American Economic Review, 2018, vol. 108, issue 8, 2174-2211

Abstract: Many government programs transfer resources to older people and implicitly or explicitly tax their labor. We shed new light on the labor supply and welfare effects of such programs by investigating the Old Age Assistance Program (OAA). Exploiting the large differences in OAA programs across states and Census data on the entire US population in 1940, we find that OAA reduced the labor force participation rate among men aged 65-74 by 8.5 percentage points, more than one-half of its 1930-1940 decline, but that OAA's implicit taxation of earnings imposed only small welfare costs on recipients.

JEL-codes: H24 H55 H75 J14 J22 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20160921
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Working Paper: Government Old-Age Support and Labor Supply: Evidence from the Old Age Assistance Program (2016)
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