NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Damon Jones

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with Alexander M. Gelber, Daniel W. Sacks
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October 2013Earnings Adjustment Frictions: Evidence from the Social Security Earnings Test
with Alexander M. Gelber, Daniel W. Sacks: w19491
We study frictions in adjusting earnings to changes in the Social Security Annual Earnings Test (AET) using a panel of Social Security Administration microdata on one percent of the U.S. population from 1961 to 2006. Individuals continue to "bunch" at the convex kink the AET creates even when they are no longer subject to the AET, consistent with the existence of earnings adjustment frictions in the U.S. We develop a novel framework for estimating an earnings elasticity and an adjustment cost using information on the amount of bunching at kinks before and after policy changes in earnings incentives around the kinks. We apply this method in settings in which individuals face changes in the AET benefit reduction rate, and we estimate in a baseline case that the earnings elasticity with respe...
March 2013Retirement Plan Type and Employee Mobility: The Role of Selection and Incentive Effects
with Gopi Shah Goda, Colleen Flaherty Manchester: w18902
Employer-provided pension plans may affect employee mobility both through an “incentive effect,” where the bundle of benefit characteristics such as vesting rules, pension wealth accrual, risk, and liquidity affect turnover directly, and a “selection effect,” where employees with different underlying mobility tendencies select across plans or across firms with different types of plans. In this paper, we quantify the role of selection by exploiting a natural experiment at a single employer in which an employee’s probability of transitioning from a defined benefit (DB) to a defined contribution (DC) pension plan was exogenously affected by default rules. Using regression discontinuity as well as differences-in-regression-discontinuities (DRD) methods, we find evidence that employees with hig...
November 2012Higher Education, Merit-Based Scholarships and Post-Baccalaureate Migration
with Maria D. Fitzpatrick: w18530
We present new evidence on the effects of merit aid scholarship programs on residential migration and educational attainment using Census data on 24 to 32 year olds in the U.S. from 1990 to 2010. Eligibility for merit aid programs slightly increases the propensity of state natives to live in-state, while also extending in-state enrollment into the late twenties. These patterns notwithstanding, the magnitude of merit aid effects is of an order of magnitude smaller than the population treated, suggesting that nearly all of the spending on these programs is transferred to individuals who do not alter educational or migration behavior.
May 2010Inertia and Overwithholding: Explaining the Prevalence of Income Tax Refunds
w15963
Over three-quarters of US taxpayers receive income tax refunds, indicating tax prepayments above the level of tax liability. This amounts to a zero interest loan to the government. Previous studies have suggested two main explanations for this behavior: precautionary behavior in light of tax uncertainty and/or a forced savings motive. I present evidence on a third explanation: inertia. I find that tax filers only partially adjust tax prepayments in response to changes in default withholdings or tax liability. I use four different settings for identification: (1) a 1992 change in default federal withholding, (2) a panel study of child dependents and tax liability, (3) the expansion of the Earned Income Tax Credit (EITC) during the 1990s and (4) a change in default enrollment rules for the A...

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