The death of a spouse can translate into an economic downfall for the surviving household member. Survivor pension programs were originally designed as co-family insurances in an era where women were inactive in the labor market and where widows were unable to support themselves and their children. The relevance and justification of generous survivor pensions could be outdated as most women are working today (full time) and built up own pension claims. Nowadays, widowed spouses could be better off than other single households thanks to the generous survivor pensions. Moreover, the provision of these pensions might create disincentives to continue work after the death of the spouse, which could lead to undesired negative side effects.
The purpose of this project is to evaluate the need for survivor pensions in old age and assess whether the social security systems are (over-)fulfilling their target of supporting survivors and whether generous survivor pensions create disincentives to engage in the labor market.
In more detail, we analyze how household income changes when one spouse of a household dies. Based on SHARE data we look at the change in the composition of the household income, e.g. survivor pensions, normal old-age pension, wages. We also consider financial assets of the deceased person as well as financial transfers from children to measure the financial situation of the surviving partner. In a next step, we consider the generosity of the social security programs in Europe and link it to the financial situation of the survivors. Further, the longitudinal data allows us to analyze the labor market status before and after the widowhood and to relate it to the financial situation.