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Can Social Security explain trends in labor force participation of older men in the United States? (Blau & Goodsein 2010)

Absence of conflict of interest.

Citation

Blau, D. M., & Goodstein, R. M. (2010). Can Social Security explain trends in labor force participation of older men in the United States? Journal of Human Resources, 45(2), 328-363.

Highlights

  • The study examined the impact of changes in Social Security Administration (SSA) retirement rules on men’s labor force participation rates in the 1960s–1980s and 1990s–2000s.
  • The study used regression analyses to predicted labor force participation rates using actual and counterfactual SSA retirement rules. These analyses use data from the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP) for the period from 1962 to 2005 merged with data from SSA on taxable earnings.
  • The study found that changes in the delayed retirement credit and full retirement age in 1983 could explain one-quarter to one-half of the increase in labor force participation in the early 2000s.
  • The quality of causal evidence presented in this report is moderate, because it is a well-implemented nonexperimental study. This means we are somewhat confident that the estimated effects are attributable to SSA reforms, but other factors might also have contributed.

Intervention Examined

Social Security Administration Reforms

Features of the Intervention

In 1983, SSA began phasing in a new full retirement age, increasing it from 65 to 66, and increased the delayed retirement credit from 1987 to 2005, which rewards retirees with higher benefits if they opt to delay retirement.

Features of the Study

The authors used a statistical model to predict labor force participation using expected retirement benefits specific to each birth year (1892–1949) for each calendar year in the study (1962–2005). The study used aggregated microdata from the CPS and SIPP to construct average earnings for each education level and age for each year for males only. They predicted labor force participation using actual SSA retirement rules and compared these predictions with predictions using the pre-reform rules.

Findings

Employment

  • The study found that changes in the delayed retirement credit and full retirement age in 1983 could explain 1.2 to 2.4 percentage points of the total 4.7 percentage point increase in labor force participation in 2001–2005 compared to 1988–1992.

Considerations for Interpreting the Findings

The study used a statistical model that controlled for age, gender, and education. Although the authors did not account for prior employment, they controlled for average lifetime earnings for each birth cohort and education group.

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate, because it is a well-implemented nonexperimental study. This means we are somewhat confident that the estimated effects are attributable to SSA reforms, but other factors might also have contributed.

Reviewed by CLEAR

September 2019

Topic Area