Jump to ContentJump to Main Navigation

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

4 Issues per year

Increased IMPACT FACTOR 2012: 0.551
5-year IMPACT FACTOR: 0.760

Access brought to you by:

provisional account

VolumeIssuePage

Retirement Incentives and Couples' Retirement Decisions

Courtney Coile1

1Wellesley College,

Citation Information: Topics in Economic Analysis & Policy. Volume 4, Issue 1, ISSN (Online) 1538-0653, DOI: 10.2202/1538-0653.1277, July 2004

Publication History

Published Online:
2004-07-27

Abstract

The typical family in the US is now a dual-earner couple, yet there are relatively few studies that examine the retirement decision in a household framework, particularly outside the context of a structural model. This paper explores how husbands’ and wives’ retirement behavior is influenced by their own financial incentives from Social Security and private pensions and by “spillover effects” from their spouses’ incentives. Spillover effects are possible due to income effects and complementarity of leisure; if significant, their omission will bias estimates of the effect of changing Social Security policy on retirement. I estimate reduced-form retirement models and find that men and women are similarly responsive to their own incentives: an increase of $1,000 in the return to additional work is associated with a reduction of 0.9% of baseline retirement for men and 1.3% of baseline retirement for women. I find that men are very responsive to their wives’ financial incentives but that women are not responsive to their husbands’ incentives and present evidence to suggest that this may be due to asymmetric complementarities of leisure. Policy simulations indicate that estimates of the effect of a policy change on the probability of men working at age 65 are biased by 13% to 20% if spillover effects are omitted.

Keywords: Social Security; retirement; couples

Comments (0)

Please log in or register to comment.