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The economics of federal tax and employment laws: Empirical evidence from three studies. (Figinski 2013)

Absence of conflict of interest.

Citation

Figinski, T. F. (2013). The economics of federal tax and employment laws: Empirical evidence from three studies. (Doctoral dissertation). Retrieved from ProQuest. Accession No. 1415455735.

Highlights

  • The study examined the impact of removing the Social Security earnings test on Social Security claims, earnings, and labor force participation for female beneficiaries.
  • The study used a statistical model and the data from the Social Security Administration’s Benefit and Earnings Public Use File to estimate impacts.
  • The study found that removing the earnings test was associated with an increase in Social Security claims among women who were primary or spousal beneficiaries and with an increase in average earnings and in labor force participation among women who were primary beneficiaries.
  • The qaulity of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the change in Social Security earings test. This means we are not confident that the estimated effects are attributable to the removal of the Social Security earnings test; other factors are likely to have contributed.

Intervention Examined

Social Security 2000 Earnings Test Removal

Features of the Intervention

The Social Security program’s earnings test reduces the benefits of Social Security beneficiaries who have earnings above an earnings test threshold. Social Security beneficiaries with earnings above the threshold receive lower benefits while their earnings remain above the threshold, but they receive higher benefits when their earnings go below the threshold. The 2000 policy change eliminated the earnings test for people between the full retirement age (age 65) and age 70.

Features of the Study

The study is a nonexperimental analysis that uses statistical models to examine the differences in Social Security claims, annual earnings, and labor force participation between women affected by the policy change and women of similar ages not affected by the policy changes. The study uses data from the Social Security Administration’s Benefit and Earnings Public Use File. The author looked separately at women who were primary beneficiaries and those who were spousal beneficiaries.

Findings

Public benefit receipt.

  • Removing the earnings test was associated with a significant increase in benefit claims among women who were primary beneficiaries and women who were spousal beneficiaries relative to the comparison group

Earnings

  • Removing the earnings test was associated with a significant increase in earnings among women who are primary beneficiaries relative to the comparison group.

Employment

  • Removing the earnings test was associated with a significant increase in labor force participation among women who were primary beneficiaries relative to the comparison group.

Considerations for Interpreting the Findings

The study is a nonexperimental study that does not account for possible differences in race or ethnicity between the groups. It seems that the administrative data the study used do not include information on race or ethnicity. Further, although the study documents that the groups were similar on outcomes before the policy change in 2000, the study acknowledges that the data do not include information about potentially important factors such as health status, wealth, and education.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the change in Social Security earnings test. This means we are not confident that the estimated effects are attributable to the removal of the Social Security earnings test; other factors are likely to have contributed.

Reviewed by CLEAR

September 2019

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