It Sucks to Be Single! Marital Status and Redistribution of Social Security

Abstract

In this article, we study the labour supply effects and the redistributional consequences of the US social security system. We focus particularly on auxiliary benefits, where eligibility is linked to marital status. To this end, we develop a dynamic, structural life cycle model of singles and couples, featuring uncertain marital status and survival.We account for the socio-economic gradients to bothmarriage stability and life expectancy. We find that auxiliary benefits have a large depressing effect on married women's employment. Moreover, we show that a revenue neutral minimum benefit scheme would moderately reduce inequality relative to the current US system.