The Social Security Payroll Tax and the Life-Cycle Work Pattern

Adrienne M. McElwain and James L. Swofford

Journal of Human Resources, 1986, vol. 21, issue 2, 279-287

Abstract: The distortion of the labor-leisure choice by the Social Security payroll tax is well known. This paper uses a life-cycle model of labor-force effort to show that the combination of the Social Security payroll tax and a maximum taxable income alters the optimum time path of work. We analyze a time-series data set to test the empirical importance of this combination on the market work of younger men. We find that it has a measurable effect on the hours worked by prime-aged men. That is, the individual works a greater number of hours when he can more easily earn an income that is higher than the payroll taxing maximum.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:21:y:1986:i:2:p:279-287

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