NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Social Security and Labor Supply Incentives

Roger H. Gordon

NBER Working Paper No. 986
Issued in September 1982
NBER Program(s):   PE

Many provisions of the Social Security Program distort an individual's labor supply incentives. In particular, the payroll tax, the earnings test, the offsetting actuarial adjustment, and the dependence of the size of future benefits on the level of current earnings all affect the net return to extra work. The purpose of this paper is to estimate the size of the net tax rate on labor income in a variety of circumstances, taking into account all these provisions, as well as the personal income tax. We find that the Social Security Program on net in the past has provided a large subsidy to labor supply, which for many people effectively offset the personal income tax. This subsidy rate, however, has been declining steadily over time.

download in pdf format
   (137 K)

email paper

This paper is available as PDF (137 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0986

Published: Gordon, Roger H. "Social Security and Labor Supply Incentives." Contemporary Economic Policy, Vol. 1, no. 3. (April 1983), pp. 16-22. citation courtesy of

Users who downloaded this paper also downloaded these:
Feldstein w5055 Tax Avoidance and the Deadweight Loss of the Income Tax
Boersch-Supan w6780 Incentive Effects of Social Security on Labor Force Participation: Evidence in Germany and Across Europe
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us