Abstract

Recent reforms to social security in many countries have sought to encourage individuals to participate in the labour market longer. Given the family context in which labour supply decisions are made, social security reforms have potentially important spill-over effects on the labour market activity of the spouse of targeted individuals. This paper analyses the impact of women's pension incentives on the retirement decision of their husband. The 1993 Age Pension reform in Australia increased the eligibility age for Age Pension benefit payments for women. Using this source of exogenous variation, we find that the increase in the pension eligibility age for women caused an increase in the labour force participation of men married to women in the affected cohorts. The behavioural responses are due to life-cycle wealth effects and preferences for shared leisure.