Trends in Labor Supply of Older Men and the Role of Social Security

Abstract

The labor supply of older men increased from the 1930s to the 1950s cohort. I estimate a structural model that fits the participation and hours worked by the 1930s cohort well. The observed policy changes in normal retirement age, the earnings test, and delayed retirement credits explain 73.4% and 88.7% of the observed rises in labor force participation and hours worked by the 1950s cohort. Additional policy experiments suggest that postponing retirement age have little effect on older workers, while eliminating the earnings test and reducing retirement benefits would further increase older age participation by 3.37 and 5.10 percent, respectively.