Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310388 
Year of Publication: 
2024
Series/Report no.: 
Working Paper No. 14/2023
Publisher: 
Norges Bank, Oslo
Abstract: 
We explore the importance and nature of elderly couples' labor market interlinkages, and how such linkages shape the response to welfare reforms. To this end, we build a life cycle model with dual-earner households, featuring heterogeneous age gaps, non-separable leisure preferences, and endogenous retirement. To inform key preference parameters, our calibration exploits quasiexperimental evidence of spousal retirement spillovers from a pension reform in Norway. We show that the experimental evidence is highly informative about the degree of non-separability of leisure and that a substantial level of complementarity is required to match the data. Using our calibrated model, we find that the commonly observed tendency of couples to retire together, despite considerable age-gap heterogeneity, can be entirely explained by leisure complementarities. Moreover, comparing to a model with leisure separability reveals that one-third of the long-run labor supply impact of the pension reform is attributed to complementarity. This illustrates the importance of accounting for interdependent decisions when evaluating policy reforms.
Subjects: 
Joint retirement
couples
life cycle
pension reform
leisure complementarity
spousal spillover
JEL: 
D15
E2
E6
E65
H55
J08
J2
Persistent Identifier of the first edition: 
ISBN: 
978-82-8379-304-8
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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