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The joint labor supply decision of married couples and the U.S. Social Security pension system

Author

Listed:
  • Shinichi Nishiyama

    (Kyoto University)

Abstract

The current U.S. Social Security program redistributes resources from high-wage workers to low-wage workers through its progressive benefits schedule and from two-earner married couples and single workers to one-earner married couples through the program's spousal and survivors benefits. This paper extends a standard general-equilibrium overlapping-generations model with uninsurable wage shocks to analyze the effect of spousal and survivors benefits on the labor supply of married households and the overall economy. The heterogeneous-agent model calibrated to the U.S. economy predicts that removing spousal and survivors benefits would increase the female labor participation rate by 1.5–1.6%, women's total work hours by 1.7–1.8%, and the total output of the economy by 0.5–0.6% in the long run. A phased-in cohort-by-cohort removal of these benefits would make all age cohorts, on average, better off under the balanced-budget assumption, although the policy change would make the majority of young married households worse off in the short run. (Copyright: Elsevier)

Suggested Citation

  • Shinichi Nishiyama, 2019. "The joint labor supply decision of married couples and the U.S. Social Security pension system," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 277-304, January.
  • Handle: RePEc:red:issued:15-372
    DOI: 10.1016/j.red.2018.08.001
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Dynamic general equilibrium; Heterogeneous agents; Overlapping generations; Female labor supply;

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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