The Effects of Marriage-Related Taxes and Social Security Benefits

Margherita Borella, Mariacristina De Nardi and Fang Yang

No 23972, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the U.S., both taxes and old age Social Security benefits depend on one's marital status and tend to discourage the labor supply of the secondary earner. 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 the latter had much higher labor market participation of married women to start with.

JEL-codes: D15 E21 H3 H31 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge and nep-mac
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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