Social Security Dependent Benefits, Net Payroll Tax, and Married Women's Labor Supply

Abstract

This paper examines how Social Security dependent benefits impact the labor supply of married women aged 25-54. Specifically, I investigate whether the decrease in the rate of return to women's work discourages them from participating in the labor force by simulating expected net payroll tax rates and dependent benefits. Dependent benefits may reduce the net return to women's work, as they usually pay the full payroll tax without receiving marginal benefits for additional earnings if they claim benefits based on their husbands' earnings records. The results show that high net payroll tax rates reduce married women's work incentives, particularly those near retirement age. © 2017 Western Economic Association International.