Data and Code for: Using Non-Linear Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Earnings Test
- Gelber, Alexander (University of California-San Diego)
- Jones, Damon (University of Chicago. Harris School of Public Policy)
- Sacks, Daniel (Indiana University)
- Song, Jae (Social Security Administration)
United States Social Security Administration
- Award Number: RRC08098400-06-00
- Alfred P. Sloan Foundation
AbstractWe estimate the impact of the Social Security Annual Earnings Test (AET) on older workers' employment. The AET reduces Social Security claimants' current benefits in proportion to their earnings in excess of an exempt amount. Using a Regression Kink Design and Social Security Administration data, we document that the discontinuous change in the benefit reduction rate at the exempt amount causes a corresponding change in the slope of the employment rate, suggesting that the extensive margin oflabor supply is more sensitive to this policy than commonly thought. We develop a model and method that allows us to translate the behavioral responses into a lower bound estimate of 0.49 for the extensive margin elasticity, which implies more than a 1 percentage point increase in work in the absence of the AET.
1978-01-01 / 1987-12-31Time Period: Sun Jan 01 00:00:00 EST 1978--Thu Dec 31 00:00:00 EST 1987 (Dates refer to the range of years studied in the paper.)
Gelber, Alexander, Damon Jones, Daniel Sacks, and Jae Song. “Using Non-Linear Budget Sets to Estimate Extensive Margin Responses: Evidence and Method from the Earnings Test.” American Economic Journal: Applied Economics, n.d.
Update Metadata: 2020-10-26 | Issue Number: 1 | Registration Date: 2020-10-26