Taxes, Wages, and the Labor Supply of Older Americans

TitleTaxes, Wages, and the Labor Supply of Older Americans
Publication TypeJournal Article
Year of Publication2009
AuthorsSchmidt, L, Sevak, P
JournalResearch on Aging
Volume31
Issue2
Pagination207
Call Numbernewpubs20070125_Schmidt-Sevak_wp139
KeywordsEmployment and Labor Force, Public Policy
Abstract

The aging of the U.S. population, combined with an increasing probability that any given older individual will work, means that the importance of older workers to the labor force is rising. One possible solution to the solvency problems facing the Social Security System is increasing the labor supply of older workers. Understanding how policy levers can affect the labor supply of the elderly therefore has become increasingly important. In this paper we use data from the Health and Retirement Study (HRS), linked to state identifiers, to estimate the responsiveness of the labor supply of older workers to features of the tax code, on both the extensive margin of participation and the intensive margin of hours of work. This unique data set allows us to avoid some of the traditional pitfalls associated with the labor supply literature. We find evidence that the labor supply of older workers is responsive to the tax structure. Our results suggest that government policies could play a role in increasing the labor supply of individuals over the age of 65 by changing the returns to work through the tax code.

URLhttp://www.mrrc.isr.umich.edu/publications/papers/
Endnote Keywords

Labor Supply/Older Workers/Public Policy/Tax Policy

Endnote ID

17070

Citation Key7305