Abstract
In this paper we study the retirement patterns of couples in a multi-country setting using data from the Survey of Health, Aging and Retirement in Europe. In particular we test whether women’s (men’s) transitions out of the labor force are directly related to the actual realization of their husbands’ (wives’) transition, using the institutional variation in country-specific early and full statutory retirement ages to instrument the latter. Exploiting the discontinuities in retirement behavior across countries, we find a significant joint retirement effect for women of 21 percentage points. For men, the estimated effect is insignificant. Our empirical strategy allows us to give a causal interpretation to the effect we estimate. In addition, this effect has important implications for policy analysis. J26, D10, C21
Highlights
1 Introduction Continued improvements in life expectancy and fiscal insolvency of public pensions have led to an increase in pension entitlement ages in several countries, especially for women for whom eligibility ages for retirement pensions have been traditionally lower than for men
5 Conclusions Continued improvements in life expectancy and fiscal insolvency of public pensions have led to an increase in pension entitlement ages in several countries
In this paper we use longitudinal data from SHARE to study the determinants of retirement decisions among European couples and how responsive each member of the couple is to their own eligibility to retirement pensions, as well as their partner?s eligibility induced retirement choice, after controlling for other factors that may affect their retirement decisions
Summary
Continued improvements in life expectancy and fiscal insolvency of public pensions have led to an increase in pension entitlement ages in several countries, especially for women for whom eligibility ages for retirement pensions have been traditionally lower than for men. The set of controls included in the regressions is the following: dummy variables for the respondent being eligible for early or full retirement, the respondent?s age, the age difference between the two members of the couple country and survey wave dummies, education variables for the two spouses, information on whether the couple has children and grandchildren as a measure of care necessities, and health status controls for both spouses, lagged one period to lessen endogeneity concerns. Statutory retirement ages must be related to actual retirement behavior To illustrate this latter point we estimated probit regressions of the individual probability of leaving the labor force, separately for husbands and wives. For men we find an effect similar in magnitude, but again insignificant Another difference with previous results is that lagged bad health does not seem to have an impact on retirement decisions for women in this case. More research is needed to better understand the differences between women?s transitions out of work to self-reported retirement or to homemaking
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