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Marriage-related Policies in an Estimated Life-cycle Model of Households’ Labor Supply and Savings for Two Cohorts

Author

Listed:
  • Margherita Borella

    (University of Torino)

  • Mariacristina De Nardi

    (University College London and Institute for Fiscal Studies)

  • Fang Yang

    (Louisiana State University)

Abstract

In the United States, both taxes and old age Social Security benefits explicitly depend on one's marital status. We study the effects of eliminating these marriage-related provisions on the labor supply and savings of two different cohorts. To do so, we estimate a rich life-cycle model of couples and singles using the method of simulated moments (MSM) on the 1945 and 1955 birth-year cohorts. Our model matches well the life-cycle profiles of labor market participation, hours, and savings for married and single people and generates plausible elasticities of labor supply. We find that these marriage-related provisions reduce the participation of married women over their life cycle, the participation of married men after age 55, and the savings of couples. These effects are large for both the 1945 and 1955 cohorts, even though to start with the latter had much higher labor market participation of married women.

Suggested Citation

  • Margherita Borella & Mariacristina De Nardi & Fang Yang, 2017. "Marriage-related Policies in an Estimated Life-cycle Model of Households’ Labor Supply and Savings for Two Cohorts," Working Papers wp371, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp371
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    Cited by:

    1. Minsu Chang, 2019. "A House Without a Ring: The Role of Changing Marital Transitions for Housing Decisions," 2019 Meeting Papers 514, Society for Economic Dynamics.
    2. Johannes Schuenemann & Holger Strulik & Timo Trimborn, 2020. "The Marriage Gap: Optimal Aging and Death in Partnerships," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 36, pages 158-176, April.
    3. Mariacristina De Nardi & Giulio Fella & Gonzalo Paz-Pardo, 2025. "Wage Risk and Government and Spousal Insurance," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(2), pages 954-980.

    More about this item

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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