%0 Report %D 2020 %T Household responses to disability shocks: Spousal labor supply, caregiving, and disability insurance %A Siha Lee %K Caregiving %K Disability %K Social Security %K spousal labor supply %X This paper examines married women’s time allocation to market hours and spousal care in the event of their husbands’ disability and its implications for evaluating the insurance value of the Social Security Disability Insurance (SSDI) program. First, I find that while spousal labor supply responses to husbands’ disability are small, wives spend a sizable amount of time in spousal care after their husbands become disabled. Motivated by these facts, I develop a dynamic model of married households that incorporates husbands’ disability status, wives’ time allocation choices, health state dependent utility, and the institutional features of SSDI. Counterfactual experiments indicate that caregiving needs substantially attenuate spousal labor supply responses and increase the insurance value of SSDI relative to its costs. Furthermore, policy reforms such as supplementary caregiving benefits can improve social welfare. %B Canadian Labour Economics Forum Working Paper Series %I University of Waterloo %C Waterloo, Ontario %G eng %U https://www.econstor.eu/bitstream/10419/215772/1/169428462X.pdf %9 Report %0 Report %D 2019 %T Bequest Motives and the Social Security Notch %A Siha Lee %A Kegon T. K. Tan %K Assets %K Bequests %K late life savings %K Social Security %X Bequests may be a key driver of late life savings behavior and more broadly, a determinant of intergenerational inequality. However, distinguishing bequest motives from precautionary savings is challenging. Using data from the Health and Retirement Study, we exploit an unanticipated change in Social Security benefits, commonly called the Social Security Notch, as an instrument to identify the effect of benefits on bequests. We show that an increase in benefits leads to a sizable increase in bequest amounts. We combine our instrumental variable estimates with a model of late life savings behavior that accounts for mortality risk and unobserved expenditure shocks to identify bequest motives. The model is used to analyze two counterfactuals. The results demonstrates the importance of bequest motives as a driver of late life savings by comparing asset profiles with and without utility from bequests. We find that roughly one-third of accumulated assets and bequests are attributable to bequest motives among retirees. Our second counterfactual features a more progressive Social Security benefits schedule that reduces benefits for the richest retirees. We show that although wealth declines, consumption remains largely unchanged since wealth generated by bequest motives acts as a cushion against benefit reduction. %I Human Capital and Economic Opportunity Global Working Group %G eng %U https://ideas.repec.org/p/hka/wpaper/2019-061.html