%0 Report %D 2018 %T Feeling Squeezed? Impact of Social Security Benefit Cuts on Labor Supply and Savings of the Elderly %A Christopher John Cruz %K Labor %K Labor Supply %K Savings %K Social Security %X While there is a general consensus that reforms are needed to improve the financial viability of the Social Security program, these reforms may have welfare implications — both intended and unintended — that remain unexamined. I revisit the 1983 Social Security reforms to examine how a large, potentially unanticipated wealth shock affects elderly workers. I exploit the nonlinearity in the design of the reforms to estimate causal effects on the labor supply and on the savings of older workers at different stages of the lifecycle. The identification highlights the relevance of cohort effects which tend to be assumed away in previous research Evidence suggests that among men, affected cohorts responded by altering their labor supply, but only when they were very close to retirement. Women also contributed through increased labor supply, both at the extensive and intensive margins. In addition, there is evidence that affected workers also responded through higher savings prior to retirement. Nonetheless, the Social Security amendments appear to have disproportionate effects, with some lowereducated workers remaining in the labor force in later years. Enhancing public understanding of the implications of future reforms could mitigate potentially adverse effects particularly on vulnerable subpopulations. %I University of Illinois at Chicago %G eng %U http://www.christopherjohncruz.com/uploads/1/1/2/3/112318225/cruz_jpm2_socsec.pdf