Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?

Mariacristina De Nardi Mariacristina De Nardi (University of Minnesota)

September 22, 2020, 15:00–16:30

Room Zoom

Macroeconomics Seminar


In the United States, both taxes and old age Social Security benefits depend on one's marital statusand tend to discourage the labor supply of the secondary earner. To what extent are these provisionsholding back female labor supply? We estimate a rich life cycle model of labor supply and savingsfor couples and singles using the method of simulated moments (MSM) on the 1945 and 1955 birth-yearcohorts and use it to evaluate what would happen without these provisions. Our model matches wellthe life cycle profiles of labor market participation, hours, and savings for married and single peopleand generates plausible elasticities of labor supply. Eliminating marriage-related provisions drasticallyincreases the participation of married women over their entire life cycle, reduces the participation ofmarried men after age 60, and increases the savings of couples in both cohorts, including the laterone, which has similar participation to that of more recent generations. If the resulting governmentsurplus were used to lower income taxation, there would be large welfare gains for the vast majorityof the population.