"Social Security and the Joint Trends in Labor Supply and Benefits Receipt Among Older Men" 

BO MACINNIS, Institute for Social Research
Email: macinnis@umich.edu

Using data from the Current Population Surveys, we find an increase in the fraction of older American men who worked without receiving Social Security retirement benefits and a decline in the fraction of men who claimed benefits without working during the period 1980-2006. Using bivariate probit regressions, we find that an increase in Social Security’s normal retirement age decreased labor force participation rate regardless of benefits receipt status; that an increase in the delayed retirement credit increased benefit receipt regardless of labor force status; and that labor force participation and claiming Social Security benefits are strongly and negatively correlated.

"When They're Sixty-Four: Peer Effects and the Timing of Retirement" 

KRISTINE M. BROWN, University of Illinois at Urbana-Champaign, Department of Economics and School of Labor and Employment Relations
Email: kmb@illinois.edu
RON LASCHEVER, University of Illinois at Urbana-Champaign, Department of Economics and School of Labor and Employment Relations
Email: ronl@uiuc.edu

This paper examines the effect of peers on an individual's likelihood of retirement using data from the Los Angeles Unified School District. We show that two large pension reforms differentially impacted the financial incentives for retirement within and across schools. Using an administrative dataset of the full population of district teachers ages 55 and over, covering the years 1997-2001 (n=31,931), we construct school-level peer groups and calculate the impact of the reforms on pension financial incentives. We use a measure of the unexpected (reform-induced) change in the pension wealth of teachers in a school as an instrument for retirements at that school. After controlling for individual and school characteristics, and including individual fixed effects, our IV estimates of the effect of colleagues' retirement on a teacher's own likelihood of retirement are sizable and statistically significant. For example, we find that the retirement of an additional teacher in the previous year at the same school increases a teacher's own likelihood of retirement by an additional 1.8 percentage points.

"Employment Status of Workers Ages 55 or Older, 1987-2008" 

EBRI Notes, Vol. 31, No. 3, March 2010

CRAIG COPELAND, Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG

This paper examines the employment status (full time, part time, or part year) of workers ages 55 or older using the latest March Current Population Survey data. The data show that the percentage of these older workers working full time, full year increased steadily from 1993-2007, before decreasing during the recession year of 2008 as employers shed jobs and the national unemployment rate climbed. Consequently, while members of the older population were more likely to work, they were less likely to be working full time, full year in 2008 after consistent increases through 2007. A growing percentage of older Americans are in the labor force: The percentage of those ages 55 or older in the labor force increased from 29.4 percent in 1993 to 39.4 percent in 2008. For those ages 65-69, the percentage increased from 18.4 percent in 1985 to 30.7 percent in 2006. These trends mark a significant change in behavior for individuals in these age groups, and are likely driven by their need to obtain affordable employment-based health insurance and to accumulate retirement savings. The employment status of workers age 55 or older has significantly moved toward full-time, full-year work – with a corresponding decline in part-time, part-year work – over the 21-year period from 1987 to 2008. This trend was found across all groups age 55 or older, all race/ethnicity categories, and all educational levels. Younger near-elderly/elderly workers were far more likely to be working full time, full year, but older workers had larger percentage-point increases in full-time, full-year work from 1987 to 2008. The full-time, full-year work trend is more closely examined across various demographic categories.

The PDF for the above title, published in the March 2010 issue of EBRI Notes, also contains the fulltext of another March 2010 EBRI Notes article abstracted on SSRN: “Tracking Health Insurance Coverage by Month: Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers.”

"Disability Risk, Disability Insurance and Life Cycle Behavior" 

NBER Working Paper No. w15962

HAMISH LOW, University of Cambridge - Faculty of Economics and Politics, Institute for Fiscal Studies (IFS)
Email: Hamish.Low@econ.cam.ac.uk
LUIGI PISTAFERRI, Stanford University, Centre for Economic Policy Research (CEPR)
Email: pista@stanford.edu

This paper provides a life-cycle framework for weighing up the insurance value of disability benefits against the incentive cost. Within this framework, we estimate the life-cycle risks that individuals face in the US, as well as the parameters governing the disability insurance program, using indirect inference and longitudinal data on consumption, disability status, disability insurance receipt, and wages. We use our estimates to characterize the economic effects of disability programs and to consider how policy reforms would affect behaviour and standard measures of household welfare. Because of high levels of false rejections associated with the screening problem, average household welfare increases as the program becomes less strict, despite the worsening incentives that this implies. Incentives for false applications are reduced by reducing generosity and increasing reassessments and these policies also increase average household welfare, despite the worse insurance implied.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

"Workers' Compensation: Benefits, Coverage, and Costs, 2007" 

ISHITA SENGUPTA, National Academy of Social Insurance (NASI)
Email: isengupta@nasi.org
VIRGINIA P. RENO, National Academy of Social Insurance (NASI)
Email: vreno@nasi.org
JOHN F. BURTON, Rutgers University - School of Management and Labor Relations
Email: jfburton@rci.rutgers.edu

Workers' Compensation: Benefits, Coverage, and Costs, 2007 is the twelfth in a series begun by the National Academy of Social Insurance to provide the only comprehensive national data on this largely state-run program. The study provides estimates of workers' compensation payments - cash and medical - for all 50 states, the District of Columbia, and federal program providing workers' compensation.

"The Effect of State Workers' Compensation Program Changes on the Use of Federal Social Security Disability Insurance" 

NBER Working Paper No. w15895

MELISSA MCINERNEY, College of William and Mary
Email: mcinerney@econ.umd.edu
KOSALI ILAYPERUMA SIMON, Cornell University - Department of Policy Analysis & Management (PAM), National Bureau of Economic Research (NBER)
Email: kis6@cornell.edu

In addition to traditional forms of private and public medical insurance, two other large programs help pay for costs associated with ill health. In 2007, Workers Compensation (WC) insurance provided $55.4 billion in medical care and cash benefits to employees who are injured at work or contract a work-related illness, and Social Security Disability Insurance (DI) provided $99 billion to individuals who suffer from permanent disabilities and are unable to engage in substantial gainful activity. During the 1990s, real DI outlays increased nearly 70 percent, whereas real WC cash benefit spending fell by 12 percent. There has been concern that part of this relationship between two of the nation’s largest social insurance programs may be due to individuals substituting towards DI as state WC policies tightened. We test this hypothesis using a number of different WC and DI program parameters. We first show that this negative correlation between the national series does not hold over time within states, the level at which a causal relationship should operate. We then test how regulatory changes in state WC program parameters impact WC outcomes (intended effect) and DI outcomes (unintended effect). We find no compelling evidence of WC tightening causing DI rolls to increase, and conclude it is unlikely that state WC changes were a meaningful factor in explaining the rise in DI.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

"Elderly Poverty and Supppplemental Security Income, 2002–2005" 

Social Security Bulletin, Vol. 70, No. 2, pp. 1-29, 2010

JOYCE NICHOLAS, Government of the United States of America - Social Security Administration
Email: joycenicholas@ssa.gov
MICHAEL WISEMAN, Government of the United States of America - Social Security Administration
Email: Michael.Wiseman@ssa.gov

The Supplemental Security Income (SSI) program is the nation’s safety net for the aged, blind, and disabled. SSI receipt is often not reported by individuals interviewed in the Current Population Survey (CPS), the statistical base for the Census Bureau’s annual estimates of poverty rates. In an earlier article, we explored the effect on estimated poverty rates in 2002 of adjusting CPS income reports using administrative data on earnings and benefits from the SSI and Old-Age, Survivors, and Disability Insurance programs. We assessed poverty using both the official standard and a “relative” standard based on half of median pretax, posttransfer income. This article extends that work through 2005. We find that including administrative data presents challenges, but under the methodology we adopt, such adjustments lower estimated official poverty overall and increase estimated poverty rates for elderly SSI recipients. Relative poverty rates are much higher than official poverty rates. By any of the applied standards and procedures for income adjustment, poverty changed little over the 2002-2005 interval.