Household Labor Supply and the Value of Social Security Survivors Benefits

David Coyne, Itzik Fadlon, Shanthi P. Ramnath and Patricia K. Tong

American Economic Review, 2024, vol. 114, issue 5, 1248-80

Abstract: We combine quasi-experimental variation in spousal death and age eligibility for survivors benefits using US tax records to study the effects on American households' labor supply and the design of social security's survivors insurance. Benefit eligibility at the exact age of 60 induces sharp reductions in the labor supply of newly widowed households, highlighting the value of survivors benefits and the liquidity they provide following the shock. Among eligible widows, the spousal death event induces no increases in labor supply, suggesting little residual need to self-insure. Using theory, we underscore the program's protective insurance role and its high valuation among survivors.

JEL-codes: D12 D91 G22 G51 H55 J16 J22 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/aer.20190813

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