The Effect of a Higher Pension Age on Spousal Labor Supply

We investigate the effect of public pension eligibility on labor force participation in couples. If leisure is complementary within households, then an increase in the pension age may lead to an increase in spousal labor supply. We test this hypothesis by exploiting a cohort wise increase in the public pension age in the Netherlands, starting in 2013. Using variation among cohorts, we identify the effect of a later pension age of the older partner in a household on the labor supply of the younger partner. Indeed we find a positive relation, both in terms of participation (extensive margin) and hours worked. The effects do not differ much between men and women. Results indicate that increasing the public pension age by one year leads to a 3 to 5 percent increase of hours worked by the younger partner.