Changing Social Security benefits to reflect child-care years: a policy proposal whose time has passed?

This article estimates the effects of proposals to increase the retirement benefits of women who reduce their earnings to care for young children. Using the 1990 Survey of Income and Program Participation file--exactly matched to the Social Security Administration's record of lifetime earnings--the authors present the distribution of child-care dropout years by retirement cohort and other demographic characteristics, and estimate the dollar impact of adjustments for caregiving years. The policies examined do increase the retirement benefits of some women, but the increases on average are small, are lowered with each successive retirement cohort, and benefit women from the more privileged socioeconomic groups. Thus, because the policy effects are small and will diminish in the future, the time of efficacy for the proposals has passed. Subsidizing child-care dropout years does not seem to be a well-targeted policy.