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Household Labor Supply and the Value of Social Security Survivors Benefits

Author

Listed:
  • David Coyne
  • Itzik Fadlon
  • Shanthi P. Ramnath
  • Patricia K. Tong

Abstract

We combine quasi-experimental variation in spousal death and age eligibility for survivors benefits using US tax records to study the effects on American households' labor supply and the design of social security's survivors insurance. Benefit eligibility at the exact age of 60 induces sharp reductions in the labor supply of newly widowed households, highlighting the value of survivors benefits and the liquidity they provide following the shock. Among eligible widows, the spousal death event induces no increases in labor supply, suggesting little residual need to self-insure. Using theory, we underscore the program's protective insurance role and its high valuation among survivors.

Suggested Citation

  • David Coyne & Itzik Fadlon & Shanthi P. Ramnath & Patricia K. Tong, 2024. "Household Labor Supply and the Value of Social Security Survivors Benefits," American Economic Review, American Economic Association, vol. 114(5), pages 1248-1280, May.
    • Handle: RePEc:aea:aecrev:v:114:y:2024:i:5:p:1248-80
    DOI: 10.1257/aer.20190813
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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