Does Social Security Continue to Favor Couples?

Abstract

While dramatic increases in women’s labor supply and earnings have led to a substantial decline in the fraction of women eligible for spouse benefits at retirement, most wives still receive a survivor benefit, as wives still typically have lower earnings than their husbands and live longer.   Using the MINT microsimulation model and the HRS data linked with Social Security administrative earnings records, this paper examines the extent to which Social Security continues to favor couples and will do so in the future.

The paper found that:

• While the Old-Age and Survivors Insurance program still distributes lifetime income from singles to couples, the transfers appear to be shrinking over time.
• Nevertheless, couples are still projected to have a higher benefit/tax ratio, a lower median net tax rate, and a greater likelihood of receiving positive net transfers from the system compared to those who are never married or divorced.
• The increased labor force participation and earnings of women have contributed significantly to the decline in redistribution from men to women, and from singles to couples, while the effect of declining marriage rates has only a modest effect.

 
The policy implications of the findings are:

• Family benefit provisions within the Social Security program can have a significant impact on various measures of redistribution.
• Policymakers may find the results of this paper helpful in evaluating any reform proposals that would change these provisions.