How Do the Changing Labor Supply Behavior and Marriage Patterns of Women Affect Social Security Replacement Rates?
AbstractThis paper seeks to determine the impact of the changing lives of women – increased labor force participation/earnings and reduced marriage rates – on Social Security replacement rates. First, our estimates, based on the Health and Retirement Study and Modeling Income in the Near Term, show that Social Security replacement rates have dropped sharply at both the household- and individual-level, and the decline will continue for future retirees. Our second finding is that this aggregate change masks a complex relationship between replacement rates and the marital status and income levels of individuals. The decline in replacement rates over time is largest for married couples with husbands whose earnings are in the top tercile. Decomposing the reasons for the overall decline shows that increases in the labor supply and earnings of women explain more than one-third of the change. In contrast, the impact of changing marital patterns is relatively small. Much of the remaining explanation rests with the increased Full Retirement Age and changing claiming behaviors.
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Bibliographic InfoPaper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2013-16.
Length: 49 pages
Date of creation: Jul 2013
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-AGE-2013-08-23 (Economics of Ageing)
- NEP-ALL-2013-08-23 (All new papers)
- NEP-DEM-2013-08-23 (Demographic Economics)
- NEP-LAB-2013-08-23 (Labour Economics)
- NEP-LMA-2013-08-23 (Labor Markets - Supply, Demand, & Wages)
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- Karamcheva, Nadia & Sanzenbacher, Geoffrey, 2013. "Bridging the Gap in Pension Participation: How Much Can Universal Tax-Deferred Pension Coverage Hope to Achieve?," IZA Discussion Papers 7518, Institute for the Study of Labor (IZA).
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