Salience and Social Security Benefits

Christian N. Brinch, Erik Hernæs and Zhiyang Jia

Memo 13/2015

Bilde av forsiden til memo 13/2015

We study the effect of salience in the social security benefit system on labor earnings by exploiting kinks and notches in budget lines introduced by earnings testing and social security accrual mechanisms for 67-69 year old workers in Norway. An earnings test had large effects on labor earnings, while an accrual system discontinuity had no discernible effects. We interpret the difference as likely to be caused by a lack of salience in the accrual incentives: agents are not able or willing to take into account the value of future benefit increases when considering the relevant rewards to working.

Memo pdf

Published July 14, 2015 12:42 PM - Last modified Jan. 24, 2019 11:44 AM