Social Security Eligibility and the Labor Supply of Older Immigrants

The employment rate of native-born men falls at a much faster rate than that of immigrants as the two groups approach the age of retirement. The author draws on U.S. Census data from 1960-2000 to examine how the eligibility requirements for Social Security benefits affect immigrants’ decisions to leave the labor market as they near retirement age. Because a person needs to have worked in the United States for at least ten years to qualify for benefits, newly arrived immigrants may not yet have accumulated the requisite employment credits to do this and thus have greater employment rates than other comparably aged persons. The probability that an older immigrant is employed falls once the 10-year work rule is satisfied. The implication of this finding is that immigration may affect the increase in retirement benefits that will inevitably occur as the baby boom generation retires.