Social Security, Economic Growth, and the Rise in Independence of Elderly Widows in the 20th Century

Abstract

The share of elderly widows living alone rose from 18 percent in 1940 to 62 percent in 1990, while the share living with adult children declined from 59 percent to 20 percent. This study analyzes the causes of this change and finds that income growth, in particular increased Social Security benefits, was the single most important factor causing the change in living arrangements accounting for nearly two-thirds of the rise in the share of elderly widows living alone. Changes in benefits from the mean-tested OAA/SSI programs had a lesser impact on the decision to live alone but were a significant factor in explaining changes in the living arrangements of the poorest widows. Furthermore, contrary to recent work, we find no evidence that the effect of income on living arrangements became stronger over the period; income had a substantial positive effect on the propensity to live alone as early as the 1940s and 1950s. Finally, the substantial changes observed in the composition of the population with respect to age, race, immigrant status, schooling, and completed fertility explain a relatively small share of the changes in living arrangements.