What Factors Explain the Decline in Widows’ Poverty?

Abstract

One of Social Security’s objectives is to ensure that vulnerable groups have adequate income in retirement.  Historically, widows have been of particular concern for policymakers due to their high rates of poverty.  However, over the past several decades, their poverty rate has fallen considerably.  If it falls farther, widowhood may warrant lower placement on policymakers’ priority list.  To understand why this decline has occurred and what it means for the future, this project uses the Health and Retirement Study linked to administrative earnings and benefit records.  Specifically, the project focuses on three factors that could explain the decline in widows’ poverty: 1) women’s rising levels of education; 2) their increased attachment to the labor force; and 3) increasing marital “selection” – i.e., the notion that while marriage used to be equally distributed, it is becoming less common among those with lower socioeconomic status.  The project explores what share of the decline in poverty can be explained by these factors and also projects the role of these factors in the future.

The paper found that:

• The rise in education and labor force participation explain most of the decline in widows’ average poverty rate from 20 percent in 1994 to 13 percent in 2014.
• So far, marital selection has not been a driving force in the decline in widows’ poverty.
• The projections suggest that widows’ poverty will continue to fall over the next 15 years.
• In the future, up to half of this reduction could be explained by the increasing selection of women into marriage.

 
The policy implications of the findings are:

• While the projected decline in widows’ poverty may allow policymakers to shift some of their focus to more vulnerable groups, widows will remain poorer than married women.
• Considering the effect on widows of any change that would bring fiscal balance to the Social Security program will continue to be important.