Data and Code for: Using Non-Linear Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Earnings Test

Resource Type
Dataset : administrative records data
  • 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)
Publication Date
Funding Reference
  • United States Social Security Administration
    • Award Number: RRC08098400-06-00
  • Alfred P. Sloan Foundation
Free Keywords
retirement; social security; nonlinear budget sets; employment
  • Abstract

    We 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.
Temporal Coverage
  • 1978-01-01 / 1987-12-31
    Time 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.)
Geographic Coverage
  • United States
Sampled Universe
Paper studies people born 1918-1923. Uploaded data is from the Earnings Public Use File, which contains earnings histories (1951-2005) for a 1% sample of all Social Security Numbers as of 2006. .
This study is freely available to the general public via web download.
  • Has version
    DOI: 10.3886/E120092V1
  • 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