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Household responses to disability shocks: Spousal labor supply, caregiving, and disability insurance

Siha Lee

No 21, CLEF Working Paper Series from Canadian Labour Economics Forum (CLEF), University of Waterloo

Abstract: This paper examines married women's time allocation to market hours and spousal care in the event of their husbands' disability and its implications for evaluating the insurance value of the Social Security Disability Insurance (SSDI) program. First, I find that while spousal labor supply responses to husbands' disability are small, wives spend a sizable amount of time in spousal care after their husbands become disabled. Motivated by these facts, I develop a dynamic model of married households that incorporates husbands' disability status, wives' time allocation choices, health state dependent utility, and the institutional features of SSDI. Counterfactual experiments indicate that caregiving needs substantially attenuate spousal labor supply responses and increase the insurance value of SSDI relative to its costs. Furthermore, policy

Keywords: disability; social security; spousal labor supply; caregiving (search for similar items in EconPapers)
JEL-codes: D13 D15 H53 H55 I38 J22 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-dge, nep-hea, nep-ias and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:clefwp:21

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