The Effects of a Retirement Age Reform on Couples' Labor Supply Decisions

Abstract

This paper estimates the effects of a reform that deferred the retirement age in Israel on spouses' labor supply. We utilize a detailed administrative dataset to study the implications of the reform, which raised both men's and women's ages of retirement benefits concurrently, in order to estimate spouses' retirement decisions and to understand their interdependencies. We find that own retirement age deferral increases own labor supply for both genders. However, spillover effects of one spouse's retirement age deferral on the other spouse's retirement behavior differ by gender. For men, labor supply does not depend on their wife’s retirement age deferral. For women, however, postponing their husband’s retirement age increases their labor supply if their own retirement age is not increased, but does not further increase their labor supply if own retirement age is already postponed.