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« Back to Results

Women's Retirement Security

Paper Session

Sunday, Jan. 7, 2018 8:00 AM - 10:00 AM

Marriott Philadelphia Downtown, Meeting Room 309
Hosted By: American Economic Association
  • Chair: Matthew S. Rutledge, Boston College

How Much Does Motherhood Cost Women in Social Security Income?

Matthew S. Rutledge
,
Boston College
Alice Zulkarnain
,
Boston College

Abstract

The increase in female labor force participation coupled with a higher number of women reaching retirement unmarried has increased the share of women claiming Social Security benefits earned through their own job histories. But they still bear the lion’s share of caregiving responsibilities, and the previous literature has provided clear evidence that motherhood reduces earnings during the childbearing and child-rearing years. What remains understudied is the extent to which mothers face lower lifetime earnings and, consequently, lower Social Security income. This paper uses the Health and Retirement Study (HRS) linked to administrative earnings records to answer three questions. First, how much less do mothers earn over their careers compared to childless women, and how much less do they earn for each additional child? Second, how do Social Security benefits differ between mothers and non-mothers? Third, how does each of the existing elements of the Social Security system that indirectly help mothers – namely, spousal benefits and the progressivity of the benefit formula – contribute to reducing the motherhood penalty?

The paper found that:

-The lifetime earnings of mothers with one child are 28 percent less than the earnings of childless women, all else equal, and each additional child lowers lifetime earnings by another 3 percent.
-When examining Social Security benefits, the motherhood penalty is smaller than the earnings penalty. But mothers with one child still receive 16 percent less in benefits than non-mothers, and each additional child reduces benefits by another 2 percent.
-The per-child motherhood penalty is almost negligible among women receiving spousal benefits, but mothers who receive benefits on only their own earnings histories see significantly lower Social Security income than childless working women, and for each child.

The policy implications of the findings are:

-Mothers end up less well off in economic terms when spousal benefits are not available.
-With the receipt of spousal benefits likely to continue its decline, policymakers may want to consider whether to compensate women for their lost earnings due to motherhood.

Changes in Marriage and Divorce as Drivers of Employment and Retirement of Older Women

Claudia Olivetti
,
Boston College and NBER
Dana Rotz
,
Mathematica

Abstract

We study associations among women’s current marital status, past marital history, and later-life labor force participation. We first document these relationships using data from the 1986 to 2008 waves of the Survey of Income and Program Participation (SIPP). We then exploit variation in laws governing divorce across states and over time to quasi-experimentally identify how the timing of an exogenous increase in divorce risk (that is, the introduction of unilateral divorce) impacts employment and retirement outcomes for older women. The spread of unilateral divorce, we find, was associated with cross-cohort differences in the probability of divorce over the lifecycle. For women with a low risk of divorce, later exposure to unilateral divorce significantly increases the probability of full-time employment later in life, and significantly decreases retirement wealth. This finding suggests that ever-divorced women are working longer remedially; when a woman unexpectedly divorces later in life, she is less likely to have engaged in precautionary human capital investment and might have to work longer to increase her assets prior to retirement. For women with a high risk of divorce, later exposure to increases in divorce risk does not impact full-time employment after age 50 but is positively associated with investment in education post marriage. These women invest more in their own human capital within marriage, which might insure them against increases in exogenous divorce risk at later ages.

Caregiving and Work: The Relationship Between Labor Market Attachment and Parental Caregiving

Sean F. Fahle
,
State University of New York-Buffalo
Kathleen McGarry
,
University of California-Los Angeles and NBER

Abstract

There has been much concern over the provision of long-term care and the stresses it imposes on the family members who provide that care. However, despite the importance of this issue, it has been difficult to assess a causal relationship between caregiving and work. A chief concern is that those with weaker attachments to the labor force may be more willing to provide care—inducing a negative correlation when caregiving itself does not negatively affect employment. In this study we draw on 20 years of data from the Health and Retirement Study to examine anew the relationship between parental caregiving and work. We use two alternative identification strategies: First, we exploit the multiple observations per person existing in our data to estimate a fixed effects model for the relationship between caregiving and work. Second, we use unique data from the Social Security Administration on earnings histories to control for a woman’s labor market behavior long before the potential need to provide care. We find evidence that caregivers have at least a strong, and by some measures a stronger, relationship to the labor market than non-caregivers. Rather than labor force attachment, the provision of care appears to be driven primarily by parental need and by the availability of alternative caregivers, particularly sisters. However, we also find that caregiving has negative long-term effects on employment and earnings and can thus be detrimental to the financial well-being of caregivers.

The Return to Work and Women's Employment Decisions

Nicole Maestas
,
Harvard University and NBER

Abstract

It is well documented that individuals in couples tend to retire around the same time. But because women tend to marry older men, this means many married women retire at younger ages than their husbands. This fact is somewhat at odds with lifecycle theory that suggests women might otherwise retire at later ages than men because they have longer life expectancies, and often have had shorter careers on account of childrearing. As a result, the opportunity cost of retirement—in terms of foregone potential earnings and accruals to Social Security wealth—may be larger for married women than for their husbands. Using the Health and Retirement Study (HRS), I find evidence that the returns to additional work beyond mid-life are greater for married women than for married men. The potential gain in Social Security wealth alone is enough to place married women on nearly equal footing with married men in terms of Social Security wealth at age 70.
Discussant(s)
Amalia Miller
,
University of Virginia and NBER
Matthew S. Rutledge
,
Boston College
Corina Mommaerts
,
University of Wisconsin-Madison
Meghan Skira
,
University of Georgia
JEL Classifications
  • J1 - Demographic Economics
  • J2 - Demand and Supply of Labor