Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy
Social insurance and the marriage market
Abstract: Social insurance is often linked to marriage. I model how
such linkage affects the marriage market, and exploit Sweden’s elimination
of survivors insurance to demonstrate economically important responses
along several behavioral margins in this market. Entry into marriage
reflects a demand for survivors insurance up to 50 years before expected
payout, especially among couples with high husband mortality risks.
Further, elimination of survivors insurance induces divorces and
intra-household redistribution towards wives in pre-existing marriages.
Because survivors insurance subsidizes couples with highly unequal earnings
(capacities), its elimination also raises the long-run assortativeness of
matching. These findings demonstrate that when social insurance is linked
to marriage, marital behavior is an integral component of couples’
strategies to plan for financial security in old age. The magnitude of
these marriage market responses influences the optimality of linking social
insurance to marriage.
Keywords: Marriage; Social insurance; Cohabitation; Matching; Long-term financial planning; (follow links to similar papers)
JEL-Codes: D13; H31; J12; (follow links to similar papers)
86 pages, March 10, 2015
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