Social insurance and children: The relationship between Social Security, economic well-being, and family context among child recipients

Abstract

The relationship between social insurance, which provides families protection against certain risks, and child economic security is understudied. Using the 2004 Survey of Income and Program Participation (SIPP) matched to Social Security Administration benefit records, this article investigates the economic welfare effects of the child component of the US Social Security program. We examine how the poverty rate of child beneficiaries would change, absent Social Security income, and how heavily the family incomes of these children rely on it, by family characteristics. Our findings reveal that Social Security plays an important role in mitigating economic insecurity among children deprived of a wage-earning parent through disability, death, or retirement. Family structure, earnings, and employment status are identified as key factors moderating the effect of Social Security on child recipients’ financial circumstance.

Keywords:

• Social Security
• child benefits
• income support programs
• child welfare
• family

Acknowledgements

The authors thank Joni Lavery, Howard Iams, Dave Shoffner, and David Weaver for valuable comments on prior versions of the paper. The views expressed in this study are those of the authors and do not represent the views of their respective organizations. The administrative data are accessible only at a secured site and for approved projects. SSA's Disclosure Review Board has reviewed the statistics reported herein. An early version of this article was presented at the 2010 Fall Conference of the Association for Public Policy Analysis and Management, Boston, MA.

Notes

1. In surveys, some adults may report child benefits as a portion of their own benefit. This makes it difficult to disentangle adult and child benefits within many families.

2. Social Security-receiving children may live in a family that does not contain an adult beneficiary for various reasons. For instance, due to divorce or remarriage, the child beneficiary may live in a household that does not include the primary adult beneficiary. For children of deceased workers, a surviving parent is not eligible for their own benefit if their earnings surpass the earnings limit, or if remarriage occurs.

3. The exclusion of children who received a benefit only part of the year affects only a small number of persons.

4. Although there continues to be much discussion about alternative poverty measures (Fisher et al. 2009), we use the federal poverty level, as it is the source of official statistics and forms a basis for eligibility to some public programs.

5. Regions include the following divisions: New England, Mid Atlantic, East North Central, West North Central, South Atlantic, East South Central, West South Central, Mountain, and Pacific.

6. The likelihood ratio test, the usual joint significance test for logistic regression, is not appropriate in this case, because it does not account for the dependency of the observations created by clustering and does not adjust for the sample weights. A more appropriate statistic is a Wald test.

7. For example, analysis of our SIPP-SSA matched data set revealed that the annual poverty rate of children with single divorced female heads in 2004 was 24% for those receiving a direct Social Security child benefit, compared to 31% for their nonrecipient peers. Among children with a never-married female family head, poverty was 38% for Social Security-receiving children and 49% for nonbeneficiary children.