Public pensions and labor supply over the life cycle

Abstract

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The Effects of Collecting Income Taxes on Social Security Benefits

“…The elasticities shown in Table 2 are similar to those found in French (2005), French andJones (2012), and Fan et al (2015), which are derived from fairly similar models.…”

“…The solid line in Figure 7(a) shows how employment changes over the life cycle. The largest effects are after age 65, reflecting that workers near retirement are sensitive to changes in the after-tax wage (French and Jones 2012;Karabarbounis 2016). This can also be seen in…”

“…The term φ h I {h=bad} reflects the time cost of bad health, aiming to reproduce the empirical observation that unhealthy people work less. The term φ n I {n>0} captures the fixed time costs of work, aiming to reproduce the observation that most people work full time or not at all (see, e.g., Cogan 1981 andFrench andJones 2012). The term φ re I {n j−1 =0 and n j >0}…”

“…The two tax mechanisms differ in three important ways. First, the burden of payroll taxes falls heavily on young and middle-aged people, who arguably have a smaller labor supply elasticity than the elderly people who receive Social Security benefits (French and Jones 2012;Karabarbounis 2016). …”

Pension Enhancements and the Retention of Public Employees

“…Large retention effects for these teachers seem unlikely based on outside evidence (Fitzpatrick, forthcoming;French and Jones, 2012;Smith and West, 2014) but we are unable to examine them directly via equations (3) and (4). While our results are still informative about the relative effects of the enhancement without knowing the baseline effect on teachers in bins 5-6, we cannot directly evaluate the enhancement policy holistically with the estimates from Table 4 alone.…”