Working Paper: NBER ID: w26696
Authors: Alexander M. Gelber; Damon Jones; Daniel W. Sacks; Jae Song
Abstract: We investigate the impact of the Social Security Annual Earnings Test (AET) on the employment decisions of older Americans. The AET reduces Social Security benefits by one dollar for every two dollars earned above the exempt amount. Using a differences-in-differences design, we find that the employment rate of those predicted to become subject to the AET decreases substantially relative to those not predicted to become subject to it. The point estimates suggest that the AET reduces the employment rate of Americans aged 63-64 by at least 1.2 percentage points.
Keywords: Social Security; Earnings Test; Employment; Older Americans
JEL Codes: H55; J22; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AET (C22) | employment rate of individuals aged 63-64 (J26) |
| AET (C22) | employment trends for individuals aged 63-64 (J26) |
| AET (C22) | work decisions of older Americans (J26) |
| exempt amount (Y60) | employment trends for individuals aged 63-64 (J26) |