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Joint Retirement in Couples: Evidence of Complementarity in Leisure

Herman Kruse

Scandinavian Journal of Economics, 2021, vol. 123, issue 3, 995-1024

Abstract: In this paper, I examine leisure complementarities in the joint retirement decisions of couples by quantifying the effect of the 2011 Norwegian pension reform. The reform abolished an earnings test on early retirement benefits for private‐sector workers, but not for public‐sector workers. I analyze population‐wide registry data on labor market participation, and I consider couples where the focal partner works in the public sector with a spouse employed either in the private sector (treatment group) or the public sector (control group). I find that spousal spillovers account for over 40 percent of the aggregate employment effect for women. They claim fewer early retirement benefits, and both men and women pay additional labor income taxes. In total, government budgets improved by approximately $46 million as a result of the spousal spillover effect between 2012 and 2015.

Date: 2021
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Scandinavian Journal of Economics is currently edited by Richard Friberg, Matti Liski and Kjetil Storesletten

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