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Pension Reforms and Couples' Labour Supply Decisions

Author

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  • Puhani, Patrick
  • Moghadam, Hamed
  • Tyrowicz, Joanna
Abstract
To determine how wives' and husbands' retirement options affect their spouses' (and their own) labour supply decisions, we exploit (early) retirement cutoffs by way of a regression discontinuity design. Several German pension reforms since the early 1990s have gradually raised women's retirement age from 60 to 65, but also increased ages for several early retirement pathways affecting both sexes. We use German Socio-Economic Panel data for a sample of couples aged 50 to 69 whose retirement eligibility occurred (i) prior to the reforms, (ii) during the transition years, and (iii) after the major set of reforms. We find that, prior to the reforms, when several retirement options were available to both husbands and wives, both react almost symmetrically to their spouse reaching an early retirement age, that is both husband and wife decrease their labour supply by about 5 percentage points when the spouse reaches age 60. This speaks in favour of leisure complementarities. However, after the set of reforms, when retiring early was much more difficult, we find no more significant labour supply reaction to the spouse reaching a retirement age, whereas reaching one's own retirement age still triggers a significant reaction in labour supply. Our results may explain some of the diverse findings in the literature on asymmetric reactions between husbands and wives to their spouse reaching a retirement age: such reactions may in large parts depend on how flexibly workers are able to retire.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Puhani, Patrick & Moghadam, Hamed & Tyrowicz, Joanna, 2023. "Pension Reforms and Couples' Labour Supply Decisions," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277582, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc23:277582
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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