Women's Labor Supply Response to Social Security.

This dissertation studies the effect of Social Security policy on women's labor supply behavior. In particular, it seeks to measure the effects of the net payroll tax rate and Social Security Wealth (SSW) on married women's choices of participation status and hours worked. The net payroll tax rate is the statutory payroll tax rate less the present value of expected retirement benefits received in return. This tax rate varies widely among married women: Women whose own earnings are low relative to their husb and 's will receive retirement benefits on the basis of their husb and s' earnings. Their own net payroll tax rates are therefore relatively high since they receive no future benefits in return for their earnings. The estimation procedure is based on a reservation-wage model of labor supply behavior. Probit and Tobit procedures are used to estimate labor force participation and hours-of-work equations respectively, using data from the 1973 wave of the Retirement History Survey. Measures of past participation status are included as explanatory variables to partially control for state dependence and for unobservable individual-specific characteristics that affect labor supply decisions. The coefficient of the marginal increment to SSW associated with earnings is significant and has the expected sign for ages 54 to 64. It is possible, however, that this significance is the result of the presence of an endogeneity problem. There is no compelling evidence that SSW significantly affects women's labor supply behavior. This finding is supported by several other studies which find that women do not respond to household wealth or to retirement income in making labor supply or retirement decisions. This is in stark contrast to the important role that Social Security policy appears to play in men's labor supply behavior.PhDLabor economicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/161686/1/8801368.pd