Dissertation

Table 3.24: Age to receive full social security benefits in the U.S.

Year of birth Full retirement age 1937 or earlier 65
1938 65 and 2 months 1939 65 and 4 months 1940 65 and 6 months 1941 65 and 8 months 1942 65 and 10 months 1943-54 66
1955 66 and 2 months 1956 66 and 4 months 1957 66 and 6 months 1958 66 and 8 months 1959 66 and 10 months 1960 and later 67


78

benefits from T_r = 41 in the initial baseline to T_r = 44 (actual age of 69) under population

aging. The effect of this policy on the welfare-maximizing social security tax rate and the

other relevant endogenous variables is reported in Table 3.25.

It is clear from the table that the welfare-maximizing changes in the tax rate with

postponement of the eligibility age are smaller in magnitude compared to the ones predicted

by the baseline model. This should not be surprising, as holding everything else constant,

increasing T_r would simply lead to higher benefits per retiree. However, these higher benefits

would induce the households to increase their labor supply by a smaller magnitude (see Table