Social Security, Labor Supply and Health of Older Workers: Quasi-Experimental Evidence from a Large Reform

Itay Saporta-Eksten (), Ity Shurtz and Sarit Weisburd
Additional contact information
Itay Saporta-Eksten: Tel Aviv University
Sarit Weisburd: Tel Aviv University
Authors registered in the RePEc Author Service: Itay Saporta Eksten

No 13263, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the effects of public pension systems on the retirement timing of older workers and, in turn, the health consequences of delaying retirement by those workers. Causal inference relies on a social security reform in Israel that shifted payments from husbands to their (non-working) wives, thereby substantially reducing the implied tax on the husband's employment while keeping overall household wealth constant. Using administrative social security data, we estimate extensive-margin labor supply elasticities w.r.t. the average net-of-tax rate of about 0.43 for men over 65. Using the reform to instrument for employment, we find that working an additional full year at old age decreases longevity. This mortality effect occurs after age 75 and is driven by workers holding blue-collar jobs. Finally, we evaluate the effect of the reform on earnings. The results imply a small value for an additional year of life, suggesting that workers underestimate the health cost of employment at older ages.

Keywords: labor supply; social security; tax reform; health; mortality (search for similar items in EconPapers)
JEL-codes: H55 J14 J17 J22 J26 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2020-05
New Economics Papers: this item is included in nep-age, nep-hea, nep-lma and nep-pbe
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Related works:
Journal Article: Social Security, Labor Supply, and Health of Older Workers: Quasi-Experimental Evidence from a Large Reform (2021)
Working Paper: Social Security, Labor Supply and Health of Older Workers: Quasi-Experimental Evidence from a Large Reform (2020)
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