Adjusting the Payroll Tax to Promote Longer Careers

TitleAdjusting the Payroll Tax to Promote Longer Careers
Publication TypeReport
Year of Publication2017
AuthorsLaitner, J, Silverman, DS
Series TitleWorking Papers
Document NumberWP 2017-363
InstitutionMichigan Retirement Research Center
CityAnn Arbor, MI
KeywordsRetirement and Labor Force, Social Security, Taxes

This paper analyzes a prospective Social Security reform that a number of authors have suggested, namely a payroll tax cut targeted on households near retirement. Our approach uses simulations of a life-cycle model, which we estimate from panel data. The simulations study effects on the labor force participation of older households. This paper specifically attempts to improve estimates of the model by incorporating newly available data, using both retirement and wealth accumulation data, and employing a formulation that avoids local optima to isolate only global maxima. Despite the changes, our results are generally consistent with earlier work, though they point to slightly more limited policy benefits.

Citation Key9620