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Early Retirement, Labor Supply, and Benefit Withholding: The Role of the Social Security Earnings Test
by Hugo A. BenÃtez-Silva and Frank Heiland
WP 2008-183
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- A removal of the earnings tax on Social Security benefits would have sizable consequences on labor supply and earnings, while tinkering with the details of the provision will have small effects on behavior and outcomes. Elimination of the earnings tax would not have a large enough effect on labor supply and earnings to meaningfully address the solvency problems of the system.
- Likewise, the possibility of increasing the ERA would mechanically delay claiming benefits and likely increase labor supply in the years leading to the new ERA, but would have a limited effect on the long run solvency of the system.
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