It Sucks to Be Single! Marital Status and Redistribution of Social Security

Groneck, Max; Wallenius, Johanna

doi:10.1093/ej/ueaa078

“…Guner, Kaygusuz, and Ventura (2012a) study the switch to a proportional income tax and a reform in which married individuals can file taxes separately and find that these reforms substantially increase female labor participation. Nishiyama (2015), Kaygusuz (2015), and Groneck and Wallenius (2017) find that removing spousal and Social Security survivor benefits would increase female labor participation, female hours worked, and aggregate output. Bick and Fuchs-Shundeln (2018) focus on a simpler static model of married couples and find that income taxes are an important factor driving differences in the labor supply of married women across countries.…”

Section: Related Literaturementioning

confidence: 99%

Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?

Borella¹,

Yang²,

Nardi³

2020

Preprint

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In the U.S., both taxes and old age Social Security benefits depend on one's marital status and tend to discourage the labor supply of the secondary earner. To what extent are these provisions holding back female labor supply?We estimate a rich life-cycle model of labor supply and savings for couples and singles using the Method of Simulated Moments (MSM) on the 1945 and 1955 birth-year cohorts and we use it to evaluate what would happen without these provisions. Our model matches well the life cycle profiles of labor market participation, hours, and savings for married and single people and generates plausible elasticities of labor supply. Eliminating marriage-related provisions drastically increases the participation of married women over their entire life cycle, reduces the participation of married men after age 55, and increases the savings of couples in both cohorts, including in the later one, which has similar participation to that of more recent generations.

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“…Guner, Kaygusuz, and Ventura (2012a) study the switch to a proportional income tax and a reform in which married individuals can file taxes separately and find that these reforms substantially increase female labor participation. Nishiyama (2015), Kaygusuz (2015), and Groneck and Wallenius (2017) find that removing spousal and Social Security survivor benefits would increase female labor participation, female hours worked, and aggregate output. Bick and Fuchs-Shundeln (2018) focus on a simpler static model of married couples and find that income taxes are an important factor driving differences in the labor supply of married women across countries.…”

Section: Related Literaturementioning

confidence: 99%

Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?

Borella

¹

,

Nardi

²

,

Yang

³

2019

View full text Add to dashboard Cite

In the U.S., both taxes and old age Social Security benefits depend on one's marital status and tend to discourage the labor supply of the secondary earner. To what extent are these provisions holding back female labor supply?We estimate a rich life-cycle model of labor supply and savings for couples and singles using the Method of Simulated Moments (MSM) on the 1945 and 1955 birth-year cohorts and we use it to evaluate what would happen without these provisions. Our model matches well the life cycle profiles of labor market participation, hours, and savings for married and single people and generates plausible elasticities of labor supply. Eliminating marriage-related provisions drastically increases the participation of married women over their entire life cycle, reduces the participation of married men after age 55, and increases the savings of couples in both cohorts, including in the later one, which has similar participation to that of more recent generations.

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“…Blundell, Costa Dias, Meghir and Shaw (2016) study how the UK tax and welfare system affects the career choices of women. Guner, Kaygusuz and Ventura (2012) and Bick and Fuchs-Schündeln (2017) investigate the effect of taxation on household labor supply, Guner, Kaygusuz and Ventura (2011) evaluate gender-based taxes, Nishiyama (2019) and Groneck and Wallenius (2017) evaluate Social Security spousal provisions, and Borella, De Nardi and Yang (2016) study the effects of marriage-related taxes and Social Security rules for different cohorts of women whose labor supply behavior has been changing.…”

Section: Introductionmentioning

confidence: 99%

Wage Risk and Government and Spousal Insurance

Nardi

¹

,

Fella

²

,

Paz-Pardo

³

2020

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The extent to which households can self-insure and the government can help them to do so depends on the wage risk that they face and their family structure. We study wage risk in the UK and show that the persistence and riskiness of wages depends on one's age and position in the wage distribution. We also calibrate a model of couples and singles with two alternative processes for wages: a canonical one and a flexible one that allows for the much richer dynamics that we document in the data. We use our model to show that allowing for rich wage dynamics is important to properly evaluate the effects of benefit reform: relative to the richer process, the canonical process underestimates wage persistence for women and generates a more important role for in-work benefits relative to income support. The optimal benefit configuration under the richer wage process, instead, is similar to that in place in the benchmark UK economy before the Universal Credit reform. The Universal Credit reform generates additional welfare gains by introducing an income disregard for families with children. While families with children are better off, households without children, and particularly single women, are worse off.

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It Sucks to Be Single! Marital Status and Redistribution of Social Security

Cited by 31 publications

References 44 publications

Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?

Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?

Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?

Wage Risk and Government and Spousal Insurance

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