The Effect of Social Security on Early Retirement

Our purpose in the present study is to analyze a new and rich body of data on the elderly to study the supply side of the effect of social security on the early retirement decision. Toward this end, section 2 presents a brief description of some previous studies of retirement behavior. While each in its own way has been suggestive, each also (including one by one of the current authors) has its own set of problems. Section 3 details the analytical framework of the present study. We propose several types of data from which one could obtain complementary information on the labor supply behavior of the elderly, and three approaches to analyzing a given body of data. We then propose a new way of estimating retirement behavior. Section 4 discusses the data used in this study: the Social Security Administration's Retirement History Survey. Section 5 reports our empirical results, estimates of probability of early retirement and early semiretirement equations. Section 6 concludes with a brief discussion of some of the implications of the study and suggestions for future research.