Scandinavian Working Papers in Economics

SSE Working Paper Series in Economics,
Stockholm School of Economics

No 2017:1: It Sucks to Be Single! Marital Status and Redistribution of Social Security

Max Groneck () and Johanna Wallenius ()
Additional contact information
Max Groneck: Dept. of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Johanna Wallenius: Dept. of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: In this paper, we study the labor supply effects and the redistributional consequences of the U.S. social security system. We focus particularly on auxiliary benefits, where eligibility is linked to marital status. To this end, we develop a dynamic, structural life cycle model of singles and couples, featuring uncertain marital status and survival. We account for the socio-economic gradients to both marriage stability and life expectancy. We find that auxiliary benefits have a large depressing effect on married women's employment. Moreover, we show that a revenue neutral minimum benefit scheme would moderately reduce inequality relative to the current U.S. system.

Keywords: Social Security; Spousal and Survivor Benefits; Marital Risk; Female Labor Supply; Redistribution

JEL-codes: D91; E62; H55; J12; J26

52 pages, February 23, 2017

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