Abstract
This paper studies the effects of the earnings test on retirement behavior. The earnings tests of most social security systems tax post0retirement earnings at a relatively high level and do not lead to actuarially fair increases in futere benefits. This results in discouragement of partial retirement. The paper shows that a reduction in the earnings test's tax rate is likely to increase part-time work, and that, in special cases, the increase in work effort may even lead to a reduction in the net transfer from social security to the individual.
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