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Economic Responses and Implicatons Social Security Reform

1. Savings Behavior

2. Work and Retirement

3. Taxes, Earnings and Revenue: Supporting Social Security and Economic Efficiency

4. Social Security and the Family

5. Disability Insurance (SSDI) and Supplemental Security Income (SSI)

6. Jobs Not Covered by Social Security

The Unified Budget, the Trust Funds, and Social Security

John Shoven     Sita Slavov    

This project examines whether the unified budget concept undermined the purpose of the buildup of the Social Security Trust Fund following the 1983 Greenspan Commission. Since the capital accumulation of the Trust Fund adds to the Unified Surplus, there is the possibility that saving of the Trust Fund was completely offset by the dissaving of the rest of the federal government. The research question is whether the Trust Fund accumulations represent incremental wealth to future generations of workers or simply unfunded obligations to pay benefits. The research examines whether government saving and national saving increased due to the decision to build up a trust fund.

Project NB04-02: Has the Unified Budget Undermined the Federal Government Trust Funds?
Executive Summary     Policy Abstract     Working Paper

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Do Social Security Benefits Provide Labor Supply Incentives?

Erzo Luttmer

A key question for Social Security reform is the extent to which people perceive a link in the current system between the Social Security taxes they pay and the Social Security benefits they will receive. The goal of this project is to estimate the incentive effects of the marginal Social Security benefits that accrue with additional earnings on three measures of labor supply: hours, labor earnings and retirement.

Project NB06-12: Do Social Security Benefits Provide Labor Supply Incentives?
Executive Summary     Policy Abstract     Working Paper

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Perceptions of Social Security Incentives for Labor Supply and Retirement

Erzo Luttmer     Jeffrey Liebman    

In this project, we will field a survey in order to learn to what extent individuals perceive the incentives that the Social Security benefit rules provide for labor supply and retirement. In addition, we propose to provide an accurate explanation of these incentives to a random subset of respondents in order to test whether better information would be likely to affect retirement behavior.

Project NB08-01: Perceptions of Social Security Incentives for Labor Supply and Retirement
Executive Summary     Policy Abstract     Working Paper

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Removing the Disincentives for Long Careers

John Shoven     Gopi Shah     Sita Slavov    

Some of the financial incentives implicit in age-based entitlement programs discourage people from long careers. In this multi-phase project, we examine these disincentives and outline ways to reduce or eliminate the implicit taxes on long careers and working at older ages.

Project NB06-06: Disincentives for Long Careers in the Structure of Social Security Benefits
Executive Summary     Policy Abstract     Working Paper

Project NB07-11: A Tax on Work for the Elderly: Medicare as a Secondary Payer
Executive Summary     Policy Abstract     Working Paper

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How Does the Design of Social Security Affect Work and Retirement Decisions? Disability Insurance and Labor Supply Forecasts

David Autor     Mark Duggan

Work-capable individuals can leave the labor force for a variety of reasons: they can become unemployed, they can reduce market work to care for dependents, and they can choose to take advantage of government benefit programs that provide income support in the absence of work. This project analyzes the extent to which eligibility for benefits decreases labor force participation, even when there is no loss of benefits from continued work.

Project NB07-17: Disability Insurance and Labor Supply Forecasts
Executive Summary     Policy Abstract     Working Paper

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The Labor Supply Behavior of Elderly Immigrants

George Borjas

This project examines the labor supply behavior of immigrants as they approach retirement age. One focus will be on the differences in labor market behavior between immigrants and natives. A second will consider how changes in the underlying characteristics of the immigrant population have impacted labor market behavior across cohorts of immigrants. The project will also track individual cohorts over time to assess "assimilation effects" on labor supply. The findings from the project will help to assess the costs and benefits of a growing population of elderly immigrants in the US.

Project NB07-13: Social Security Eligibility and the Labor Supply of Elderly Immigrants
Executive Summary     Policy Abstract     Working Paper

Project NB08-10: The Effects of Immigration on Labor Market Outcomes in the Elderly Workforce
Executive Summary     Policy Abstract     Working Paper

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Who Determines When You Retire? Peer Effects and Retirement

John Chalmers     Woodrow Johnson     Jonathan Reuter

Using data on the retirement decisions of 130,000 Oregon state employees, this project looks at the influence of peers on retirement behavior. For example, are employees more likely to retire when they observe their coworkers retiring? Are peer effects stronger when the characteristics of retirement benefits are more confusing? And do peer-effects result in more or less disparity between actual and "optimal" retirement dates?

Project NB08-13: Who Determines When You Retire? Peer Effects and Retirement
Executive Summary     Policy Abstract     Working Paper

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Earnings Responses to Increases in Payroll Taxes

Jeff Liebman     Emmanuel Saez

One approach to improving the long-term financial outlook for Social Security is through an increase in the payroll tax. This project estimates the responsiveness of Social Security covered earnings to changes in marginal tax rates. The estimates will then be used to simulate the impact of various increases in the Social Security payroll tax base and the Social Security payroll tax rate on program revenues and cash flow, fund balances, and economic welfare.

Project NB04-06: Earnings Responses to Increases in Payroll Taxes
Executive Summary     Policy Abstract     Working Paper

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A Comparison of Revenue Options for Social Security Reform

Kent Smetters

There are many approaches that could be used to improve the long-term sustainability of the Social Security system. This project explores the macroeconomic implications of several classes of options, including both benefit reductions and increases in revenues through payroll taxes, income taxes, and consumption taxes. The project estimates the impact of these various reforms on labor supply, capital accumulation, wages and interest rates, consumption, and economic welfare.

Project NB04-07: Diminishing America's Demographic Dilemma through Pre-Funding Social Security
Executive Summary     Policy Abstract     Working Paper

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Modernizing Social Security's Treatment of the Family

Gopi Shah Goda     John Shoven     Sita Slavov    

Social Security includes many provisions for familias, designed during the early years of the program, when family structure differed considerable from today. In this project, we study the impact of Social Security's provisions on today's familias, as well as the implications of various reforms designed to modernize the treatment of the family. Specifically, we examine spouse benefits, rules for divorce, and the treatment of time out of the labor force.

Project NB07-10: Social Security and the Timing of Divorce
Executive Summary     Policy Abstract     Working Paper

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Interactions in Labor Market Behavior between Husbands and Wives

Chinhui Juhn     Simon Potter

This project looks at the relationship between the labor market behavior of husbands and wives. To what extent is spousal labor supply jointly determined? Is it positively correlated, reflecting complementary decision-making, or negatively correlated, reflecting a substitutability of income across spouses? How does the relationship vary by age and by socioeconomic factors? And how has the relationship changed over time?

Project NB07-14: Is There Still an Added Worker Effect?
Executive Summary     Policy Abstract     Working Paper

Project NB08-03: Interactions in the Labor Market Behavior of Couples over the Life Course
Executive Summary     Policy Abstract     Working Paper

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The Under-Reporting of Social Security, SSDI and SSI participation

Bruce Meyer     Wallace Mok     James Sullivan

This project will quantify the under-reporting of participation in various Social Security programs. We will calculate self-reported participation rates in five large household surveys for Social Security retirement benefits, Social Security disability benefits, and Supplemental Security Income. We will explore how it differs across program and dataset, and how it varies with individual recipient characteristics. By comparing self-reported and actual participation rates, the under-reporting bias can be incorporated at least partially in improving analytical work using survey data.

Project NB08-12: The Under-Reporting of Socials Security, SSDI and SSI Participation
Executive Summary     Policy Abstract     Working Paper

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Interactions Between Veteran's Disability, OASDI and SSI

David Autor     Mark Duggan

The objective of this project is to assess the impact of the Veterans Disability Insurance program (VDC) on Social Security enrollment, including SSI, SSDI and OASI. This topic is relevant to SSA both because VDC has expanded rapidly since 2001 and because further substantial increases in VDC enrollment are expected due to ongoing U.S. military involvement in Iraq and Afghanistan.

Project NB08-07: Interactions between Veteran's Disabiliyt, OASDI, and SSI
Executive Summary     Working Paper

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The Employment Effects of Changing Social Security Disability Rolls Over the Past 25 Years

Till von Wachter

Is the rapid recent increase in disability rolls partially driven by workers induced to apply due to difficult economic conditions? Would these workers have found gainful employment in the absence of disability insurance? We study these questions based on a new administrative data set covering over 25 years of information on individual earnings, employment, disability receipt and application. Our results will enable us to assess the costs of SSDI due to foregone earnings of new beneficiaries who would have worked in the absence of the program, and how these costs have changed over time.

NB08-08: The Employment Effects of Changing Social Security Disability Rolls over the Past 25 Years
Executive Summary     Policy Abstract     Working Paper

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The Distributional and Incentive Effects of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)

Jeffrey Brown     Scott Weisbenner    

The "windfall elimination provision" and the "government pension offset" rules define the apportionment of Social Security benefits to households whose lifetime earnings are divided between employment covered by Social Security and employment not covered by Social Security. The goal of this project is to analyze the distributional and incentive effects of these provisions, and how they would change under various possible reforms.

Project NB08-05: The Distributional and Incentive Effects of the Windfall Elimination Provision (WEP) & the Gov. Pension Offset
Executive Summary     Policy Abstract     Working Paper

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