Date

2015

Department or Program

Economics

Primary Wellesley Thesis Advisor

Daniel Fetter

Additional Advisor(s)

Courtney Coile

Additional Advisor

Robin McKnight

Abstract

Increasing taxation, reducing benefits, and raising the retirement age are popular topics of debate surrounding the Social Security program. Past research has shown that lower benefits decrease independent living and homeownership, and increases poverty amongst the elderly. However, the ability to live in desirable locations also impacts welfare. How do Social Security benefits reductions impact elderly migration and location choice? Higher local wages generally compensate higher local housing costs. However, unlike their children, Social Security recipients have mostly retired. With soaring metropolitan real estate prices and rent hikes, are those relying on Social Security benefits forced to move from high-cost to low-cost locations? What are the impacts on welfare if the elderly must live in lower-cost areas or potentially live farther from their children? I shed light on these questions by exploiting the Social Security notch to examine the effects of an exogenous decrease in Social Security benefits on where the elderly have chosen to live.

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