The Effects of Changes in State SSI Supplements on Pre-Retirement Labor Supply

David Neumark and Elizabeth Powers

No 9851, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Because the Supplemental Security Income (SSI) program is means-tested, with both income limits and asset limits, those on the margin of eligibility for the elderly component of the program face incentives to reduce labor supply (or earnings) prior to becoming eligible. Our past research relying on cross-state variation in SSI benefits found evidence consistent with the predicted negative labor supply effects. However, a reliance on cross-state variation necessitated reliance on less-than-ideal control samples. In contrast, this paper uses CPS data covering a 22-year period, which permit identification of the effects of SSI from within-state, time-series variation in SSI benefits, using a better control sample. The evidence points consistently to negative effects of more generous SSI payments on the labor supply of likely SSI participants aged 62-64. The implied elasticities of labor supply with respect to benefits, for those with a high probability of SSI participation, are generally in the range of 0.2 to 0.3, looking at both employment and hours of work.

JEL-codes: I3 J2 (search for similar items in EconPapers)
Date: 2003-07
New Economics Papers: this item is included in nep-lab and nep-ltv
Note: AG LS
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Citations: View citations in EconPapers (6)

Published as Public Finance Review, Vol. 33, no. 1 (January 2005): 3-35

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Journal Article: The Effects of Changes in State SSI Supplements on Preretirement Labor Supply (2005)
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