NBER

Patricia Tong

RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Fax: Financial Economist

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: RAND Corporation

NBER Working Papers and Publications

February 2019Household Responses to Transfers and Liquidity: Evidence from Social Security’s Survivors Benefits
with Itzik Fadlon, Shanthi P. Ramnath: w25586
We use administrative tax data that cover the U.S. population to identify the causal effects of Social Security’s survivors benefit receipt on American families’ behavior and financial well-being. We analyze over a quarter of a million widowed households in which the husband died between 2002-2007, and we exploit a sharp age discontinuity in benefit eligibility to study the responses of financially vulnerable households to government transfers. We first study how households respond to unanticipated benefit receipt in the immediate periods following a large financial shock to investigate the protective role of transfers. We find significant impacts of the program on newly-widowed families’ net income and labor supply behavior, which points to considerable allocative inefficiencies in the li...

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