Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp16039.html
   My bibliography  Save this paper

Pension Reforms and Couples' Labour Supply Decisions

Author

Listed:
  • Markazi Moghadam, Hamed

    (Leibniz University of Hannover)

  • Puhani, Patrick A.

    (Leibniz University of Hannover)

  • Tyrowicz, Joanna

    (University of Warsaw)

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.

Suggested Citation

  • Markazi Moghadam, Hamed & Puhani, Patrick A. & Tyrowicz, Joanna, 2023. "Pension Reforms and Couples' Labour Supply Decisions," IZA Discussion Papers 16039, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16039
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp16039.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Social security, pensions and retirement behaviour within the family," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 723-737.
    2. Riphahn, Regina T. & Schrader, Rebecca, 2023. "Reforms of an early retirement pathway in Germany and their labor market effects," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(3), pages 304-330, July.
    3. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2020. "Labor Market and Distributional Effects of an Increase in the Retirement Age," Labour Economics, Elsevier, vol. 65(C).
    4. Stancanelli, Elena, 2017. "Couples’ retirement under individual pension design: A regression discontinuity study for France," Labour Economics, Elsevier, vol. 49(C), pages 14-26.
    5. Julian Vedeler Johnsen & Kjell Vaage & Alexander Willén, 2022. "Interactions in Public Policies: Spousal Responses and Program Spillovers of Welfare Reforms," The Economic Journal, Royal Economic Society, vol. 132(642), pages 834-864.
    6. Hans Bloemen & Stefan Hochguertel & Jochem Zweerink, 2019. "The Effect Of Incentive‐Induced Retirement On Spousal Retirement Rates: Evidence From A Natural Experiment," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 910-930, April.
    7. Michael D. Hurd, 1990. "The Joint Retirement Decision of Husbands and Wives," NBER Chapters, in: Issues in the Economics of Aging, pages 231-258, National Bureau of Economic Research, Inc.
    8. Lalive, Rafael & Parrotta, Pierpaolo, 2017. "How does pension eligibility affect labor supply in couples?," Labour Economics, Elsevier, vol. 46(C), pages 177-188.
    9. Zweimuller, Josef & Winter-Ebmer, Rudolf & Falkinger, Josef, 1996. "Retirement of spouses and social security reform," European Economic Review, Elsevier, vol. 40(2), pages 449-472, February.
    10. Johannes Geyer & Clara Welteke, 2021. "Closing Routes to Retirement for Women: How Do They Respond?," Journal of Human Resources, University of Wisconsin Press, vol. 56(1), pages 311-341.
    11. Sebastian Calonico & Matias D. Cattaneo & Max H. Farrell & Rocío Titiunik, 2019. "Regression Discontinuity Designs Using Covariates," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 442-451, July.
    12. Håkan Selin, 2017. "What happens to the husband’s retirement decision when the wife’s retirement incentives change?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 432-458, June.
    13. Kadir Atalay & Garry F. Barrett & Peter Siminski, 2019. "Pension incentives and the joint retirement of couples: evidence from two natural experiments," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 735-767, July.
    14. Engels, Barbara & Geyer, Johannes & Haan, Peter, 2017. "Pension incentives and early retirement," Labour Economics, Elsevier, vol. 47(C), pages 216-231.
    15. Edith Sand & Shirlee Lichtman-Sadot, 2019. "The Effects of a Retirement Age Reform on Couples' Labor Supply Decisions," Bank of Israel Working Papers 2019.13, Bank of Israel.
    16. Eibich, Peter, 2015. "Understanding the Effect of Retirement on Health: Mechanisms and Heterogeneity," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 43, pages 1-12.
    17. Francesca Carta & Marta De Philippis, 2021. "Working horizon and labour supply: the effect of raising the full retirement age on middle-aged individuals," Temi di discussione (Economic working papers) 1314, Bank of Italy, Economic Research and International Relations Area.
    18. Frederic Vermeulen, 2002. "Collective Household Models: Principles and Main Results," Journal of Economic Surveys, Wiley Blackwell, vol. 16(4), pages 533-564, September.
    19. Elena Stancanelli, 2017. "Couples’ Retirement under Individual Pension Design: a Regression Discontinuity Study for France," PSE-Ecole d'économie de Paris (Postprint) hal-01630922, HAL.
    20. Bonsang, Eric & van Soest, Arthur, 2020. "Time devoted to home production and retirement in couples: A panel data analysis," Labour Economics, Elsevier, vol. 65(C).
    21. Arthur Seibold, 2021. "Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities," American Economic Review, American Economic Association, vol. 111(4), pages 1126-1165, April.
    22. Coile Courtney, 2004. "Retirement Incentives and Couples' Retirement Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-30, July.
    23. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-545, July.
    24. Elena Stancanelli, 2017. "Couples’ Retirement under Individual Pension Design: a Regression Discontinuity Study for France," Post-Print hal-01630922, HAL.
    25. Sebastian Calonico & Matias D. Cattaneo & Max H. Farrell & Roc ́ıo Titiunik, 2017. "rdrobust: Software for regression-discontinuity designs," Stata Journal, StataCorp LP, vol. 17(2), pages 372-404, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. García-Miralles, Esteban & Leganza, Jonathan M., 2024. "Joint retirement of couples: Evidence from discontinuities in Denmark," Journal of Public Economics, Elsevier, vol. 230(C).
    2. Etgeton, Stefan & Fischer, Björn & Ye, Han, 2023. "The effect of increasing retirement age on households’ savings and consumption expenditure," Journal of Public Economics, Elsevier, vol. 221(C).
    3. Julian Vedeler Johnsen & Kjell Vaage & Alexander Willén, 2022. "Interactions in Public Policies: Spousal Responses and Program Spillovers of Welfare Reforms," The Economic Journal, Royal Economic Society, vol. 132(642), pages 834-864.
    4. Merkurieva, Irina, 2023. "Retirement coordination and leisure complementarity," Labour Economics, Elsevier, vol. 85(C).
    5. Nagore García, Amparo & van Soest, Arthur, 2022. "Joint retirement behaviour and pension reform in the Netherlands," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    6. Todd Morris, 2022. "The unequal burden of retirement reform: Evidence from Australia," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 592-619, April.
    7. Herman Kruse, 2021. "Joint Retirement in Couples: Evidence of Complementarity in Leisure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 995-1024, July.
    8. Håkan Selin, 2017. "What happens to the husband’s retirement decision when the wife’s retirement incentives change?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 432-458, June.
    9. Francesca Carta & Marta De Philippis, 2021. "Working horizon and labour supply: the effect of raising the full retirement age on middle-aged individuals," Temi di discussione (Economic working papers) 1314, Bank of Italy, Economic Research and International Relations Area.
    10. Kadir Atalay & Garry F. Barrett & Peter Siminski, 2019. "Pension incentives and the joint retirement of couples: evidence from two natural experiments," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 735-767, July.
    11. Lalive, Rafael & Parrotta, Pierpaolo, 2017. "How does pension eligibility affect labor supply in couples?," Labour Economics, Elsevier, vol. 46(C), pages 177-188.
    12. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2020. "Labor Market and Distributional Effects of an Increase in the Retirement Age," Labour Economics, Elsevier, vol. 65(C).
    13. Todd Morris & Benoit Dostie, 2023. "Graying and staying on the job: The welfare implications of employment protection for older workers," Cahiers de recherche / Working Papers 15, Institut sur la retraite et l'épargne / Retirement and Savings Institute.
    14. Idriss Fontaine, 2019. "The interaction between labour force participation of older men and their wife: lessons from France," Working Papers hal-02334085, HAL.
    15. Kadir Atalay & Garry Barrett, 2022. "Retirement routes and the well-being of retirees," Empirical Economics, Springer, vol. 63(5), pages 2751-2784, November.
    16. Octave Brouwer & Ilan Tojerow, 2024. "Old-age unemployment and labour supply: an application to Belgium," Empirical Economics, Springer, vol. 67(1), pages 253-287, July.
    17. Cetin, Sefane & Jousten, Alain, 2022. "Retirement Decision of Belgian Couples and the Impact of the Social Security System," LIDAM Discussion Papers CORE 2022024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Warren, Diana A., 2015. "Retirement decisions of couples in Australia: The impact of spousal characteristics and preferences," The Journal of the Economics of Ageing, Elsevier, vol. 6(C), pages 149-162.
    19. Bo Honoré & Thomas Jørgensen & Áureo de Paula, 2020. "The informativeness of estimation moments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(7), pages 797-813, November.
    20. Fürstenau, Elisabeth & Gohl, Niklas & Haan, Peter & Weinhardt, Felix, 2023. "Working life and human capital investment: Causal evidence from a pension reform," Labour Economics, Elsevier, vol. 84(C).

    More about this item

    Keywords

    retirement coordination; labour market participation; household decisions; regression discontinuity design;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp16039. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.