TY  - RPRT
        AU  - Michaud, Pierre-Carl
        TI  - Joint Labour Supply Dynamics of Older Couples
        PY  - 2003/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 832
        UR  - https://www.iza.org/publications/dp832
        AB  - This paper studies the labour force participation dynamics of older couples in the United
States. Longitudinal data from the five available waves of the Health and Retirement Study
(HRS) is used to investigate if the dynamics introduced by considering both spouses’
behavior provide additional information in trying to fit observed participation sequences. The
paper uses a bivariate dynamic binary choice model with unobserved heterogeneity and
serial correlation to disentangle the many sources of dynamics and correlation in a couple’s
decision making. First, strong true state-dependence is found and results in a bunching of
participation and non-participation sequences. Cross-spouse state-dependence is also found
which points to indirect effects of social security and pension incentives through
complementarity in leisure. Second, the Spouse Allowance program is found to have
predicted effects on participation of the couple and these effects are statistically significant. A
simulation exercise presents evidence that the elimination of the spouse allowance can raise
participation of wives at age 62 by more than the decrease in participation of husbands at
age 65.
        KW  - labour supply of couples
KW  - retirement
KW  - dynamic panel data models
        ER  -