The editor and the editorial board of Public Finance Review (PFR) have selected FIU Robert Stempel College of Public Health & Social Work faculty member Dr. Timothy F. Page as one of two winners of their annual “Outstanding Paper Award” for an article that considerably expands the understanding of how the elderly respond to taxation.
Dr. Page received his PhD in economics from the University of New Hampshire and is currently an assistant professor in the Department of Health Policy & Management at FIU Stempel College. He co-authored the article with Dr. Karen Smith Conway, a professor of economics at the University of New Hampshire. Their award-winning article, The Labor Supply Effects of Taxing Social Security Benefits appeared in the May 2015 issue of PFR.
The article contributes important new empirical evidence on the effects of taxing social security benefits on the labor supply decisions of the elderly, an especially important and timely issue given frequent congressional calls for higher social security taxes.
Dr. Page and Dr. Conway employed data from the United States Census Bureau for 1981 to 1986, a period that overlaps the first year (1983) when the federal government and several states began taxing social security benefits. They apply several estimation methods including analyses of clustering around the taxation thresholds, difference-in-differences approaches, and the parameterization of the income and wage effects of the policy change.
Their estimates suggest that the roughly 20 percent reduction in benefits for the highest income individuals led to a 2-to-5 percentage point increase in their labor force participation. They also use more recent (2008) data to simulate the labor supply effects of failing to index the taxation thresholds, adding a second set of thresholds, and removing the earnings test, in all cases finding significant behavioral responses.