Child-rearing, Social Security and Married Women’s Labor Supply over the Life Cycle

Debasmita Das

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies how career interruptions during child-rearing years affect the labor market trajectory, lifetime earnings, and Social Security benefits of married women in the United States. To this end, I develop a dynamic structural life-cycle model of female labor supply, savings, and Social Security benefit claiming and estimate the model using the Method of Simulated Moments for the 1943-1954 birth cohort. Utilizing the estimated model, I evalu- ate the effects of revenue-neutral introduction of the Social Security Caregiver Credits that cover lost earnings during early child-rearing years through change in retirement benefits. The model predicts that introducing the provision of earning credits for child care in the Social Security system would lead to a sizeable reduction in gender gap in average career earnings at the Social Security Early Retirement Age. The findings suggest that instituting caregiver credits for child-rearing in the absence of the marriage-based Social Security ben- efits would offset a substantial portion of the motherhood penalty in lifetime labor earnings of married women and increase their retirement benefit adequacy.

Keywords: Caregiver Credit; Female Labor Supply; Life-cycle Model; Social Security (search for similar items in EconPapers)
JEL-codes: D14 E21 H55 I38 J13 J21 J26 (search for similar items in EconPapers)
Date: 2022-08-04, Revised 2022-09-10
New Economics Papers: this item is included in nep-age, nep-dem and nep-dge
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:117614

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