Volume 21, Number 2 (Spring) 1986
McElwain, Adrienne M., and James L. Swofford. 1986. "The Social Security Payroll Tax and the Life-Cycle Work Pattern." Journal of Human Resources 21(2):279-287.
The distol1ion of the labor-leisure choice by the Social Security payroll tax is well known. This paper uses a life-cycle model of labor-force effort to show that the combination of the Social Security payroll tax and a maximum taxable income alters the optimum time path of work. We analyze a time-series data set to test the empirical importance of this combination on the market work of younger men. We find that it has a measurable effect on the hours worked by prime-aged men. That is, the individual works a greater number of hours when he can more easily earn an income that is higher than the payroll taxing maximum.
The authors gratefully acknowledge helpful comments by John Turner and an anonymous referee, and claim any remaining errors as their own. An earlier version of this paper was presented at the winter meetings of the Econometric Society, Dallas, December 1984.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X