Chapter 7: Retirement in Non-Cooperative and Cooperative Families
7. Retirement in non-cooperative and cooperative families* Erik Hernæs, Zhiyang Jia and Steinar Strøm 1. INTRODUCTION An increasing proportion of elderly persons in the population, falling labor force participation of older males and maturing of the public pension system all combine to threaten the ﬁnancial stability of pay-as-you-go public pension systems in many industrialized countries. In Norway, problems have been exacerbated by the introduction of an early retirement program, hereafter called AFP (a Norwegian abbreviation). From a policy point of view, knowledge about how economic incentives aﬀect workers’ retirement, and to what extent they will respond to policy changes are therefore important. Most of the literature on retirement behavior has focused on single individuals; see Lumsdaine and Mitchell (1999) for references. However, since a majority of older men and women are married or cohabitating, it is important to account for the fact that labor market behavior may be due to joint decisions by married couples. Among the relatively few empirical studies of retirement behavior in a household context, most have focused on patterns of family retirement, like ‘wife ﬁrst’, ‘joint retirement’ and ‘husband ﬁrst’; see Henretta and O’Rand (1983) for an early contribution. In recent studies Gustman and Steinmeier (2000) ﬁnd a tendency for spouses to retire together, which they attribute to correlation in preferences for (joint) retirement. Baker (2002) ﬁnds that the propensity to retire among males is around 5–10 percentage points higher when the wife is eligible for a supplementary pension. Blau (1997) ﬁnds...
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