Welfare for the elderly: the effects of SSI on pre-retirement labor supply

This paper studies pre-eligibility-age labor market disincentives created by the Supplemental Security Income (SSI) program. Asset and income limits might induce individuals nearing the eligibility age to work less. We exploit states’ supplementation of federal SSI benefits to estimate the effects of SSI on pre-retirement labor supply, using SIPP data. We find some evidence that generous SSI benefits reduce the pre-retirement labor supply (and earnings) of men who are likely to participate in SSI after retirement, as they near the eligibility age, especially men who are eligible for early Social Security benefits, which may be used to offset their reduced labor income.  2000 Elsevier Science S.A. All rights reserved.