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Spousal Labor Supply, Caregiving, And The Value Of Disability Insurance

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  • Siha Lee

Abstract

This article evaluates the insurance value of the Social Security Disability Insurance (SSDI) program among married households when wives face a trade‐off between market hours and spousal care following their husbands' disability. Event study analyses show that wives' labor supply responses to their husbands' disability are small, and instead, a considerable amount of time is spent in spousal care. Using a dynamic structural model, I find that incorporating time loss due to spousal care increases the insurance value of SSDI relative to its costs. Finally, budget‐neutral policy reforms that subsidize the cost of care can improve social welfare.

Suggested Citation

  • Siha Lee, 2024. "Spousal Labor Supply, Caregiving, And The Value Of Disability Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(4), pages 1681-1716, November.
    • Handle: RePEc:wly:iecrev:v:65:y:2024:i:4:p:1681-1716
    DOI: 10.1111/iere.12712
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    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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