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

Principal Investigator(s): View help for Principal Investigator(s) Alexander Gelber, University of California-San Diego; Damon Jones, University of Chicago. Harris School of Public Policy; Daniel Sacks, Indiana University; Jae Song, Social Security Administration

Version: View help for Version V1

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replication			07/28/2020 01:35:PM
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Project Citation:

Gelber, Alexander, Jones, Damon, Sacks, Daniel, and Song, Jae. Data and Code for: Using Non-Linear Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Earnings Test. Nashville, TN: American Economic Association [publisher], 2020. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2020-10-26. https://doi.org/10.3886/E120092V1

Project Description

Summary:

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 of

labor 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.

Funding Sources: United States Social Security Administration (RRC08098400-06-00); Alfred P. Sloan Foundation

Scope of Project

Subject Terms: retirement; social security; nonlinear budget sets ; employment

JEL Classification:
      H30 Fiscal Policies and Behavior of Economic Agents: General
      H55 Social Security and Public Pensions
      J22 Time Allocation and Labor Supply

Geographic Coverage: United States

Time Period(s): 1/1978 – 12/1987 (Dates refer to the range of years studied in the paper.)

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.

Data Type(s): administrative records data

Methodology

Data Source: Earnings Public Use File data uploaded; paper uses Master Earnings File and Master Beneficiary Record

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Published Versions

V1 [2020-10-26]

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