Research & Analysis by Louis Esposito
The purpose of this paper is to investigate the effect of the social security system on the labor supply of aged men using U.S. time series data for the period 1947 to 1975. The specific phenomena to be explained is the dramatic decrease in the labor supply of aged men during this period. Between 1947 and 1975, the annual labor force participation rate of men 65 and over decreased from 47.8 percent to 21.7 percent—a decrease of 55 percent. In terms of annual hours worked per capita for men 65 and over, there was a decrease from about 880 hours to 312 hours during this period—a decrease of 65 percent. The specific focus of the analysis will be on the relative importance of social security in explaining this decrease in labor supply.