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Research ArticleArticles

The Employment Effects of the Social Security Earnings Test

View ORCID ProfileAlexander Gelber, View ORCID ProfileDamon Jones, View ORCID ProfileDaniel W. Sacks and Jae Song
Journal of Human Resources, March 2022, 57 (2) 341-371; DOI: https://doi.org/10.3368/jhr.57.2.1018-9830R2
Alexander Gelber
Alexander Gelber is an associate professor at the University of California, San Diego ()
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Damon Jones
Damon Jones is an associate professor at the Harris School, University of Chicago
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Daniel W. Sacks
Daniel W. Sacks is an associate professor at the Kelley School, Indiana University.
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Jae Song
Jae Song is an economist at the Office of the Inspector General, Social Security Administration.
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Abstract

We investigate the impact of the Social Security annual earnings test (AET) on the employment decisions of older Americans. The AET reduces Social Security benefits by one dollar for every two dollars earned above the exempt amount. Using a differences-in-differences design, we find that the employment rate of those predicted to become subject to the AET decreases substantially relative to those not predicted to become subject to it. The point estimates suggest that the AET reduces the employment rate of Americans aged 63–64 by at least 1.2 percentage points.

JEL Classification:
  • H31
  • H55
  • J22
  • Received October 2018.
  • Accepted January 2020.
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Journal of Human Resources: 57 (2)
Journal of Human Resources
Vol. 57, Issue 2
1 Mar 2022
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The Employment Effects of the Social Security Earnings Test
Alexander Gelber, Damon Jones, Daniel W. Sacks, Jae Song
Journal of Human Resources Mar 2022, 57 (2) 341-371; DOI: 10.3368/jhr.57.2.1018-9830R2

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The Employment Effects of the Social Security Earnings Test
Alexander Gelber, Damon Jones, Daniel W. Sacks, Jae Song
Journal of Human Resources Mar 2022, 57 (2) 341-371; DOI: 10.3368/jhr.57.2.1018-9830R2
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    • I. Introduction
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Keywords

  • H31
  • H55
  • J22
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