Working Paper: NBER ID: w7138
Authors: Michael Baker
Abstract: I examine the effects of the introduction of the Spouse's Allowance to the Canadian Income Security (IS) system on the retirement behavior of couples. This program was effectively targeted at females in couples attempting to live on a single pension. It allowed qualifying spouses to receive the age related benefits of the IS system at age 60, up to five years earlier than other members of the population. This policy intervention provides an excellent opportunity to investigate how income security programs affect the timing of retirement, and how programs targeted at one spouse can affect the behavior of the other. The results indicate that the introduction of the Allowance is associated with a relative increase in the labor force rates of 6 to 7 percentage points among males in eligible couples. Eligible females did not share the rising employment rates over the 1970s experienced by their counterparts (of the same age) who were not eligible for the Spouse's Allowance.
Keywords: retirement behavior; spouses allowance; income security; labor market participation
JEL Codes: H55; J22; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| SPA introduction (C87) | increase in labor force participation rates of males in eligible couples (J49) |
| SPA introduction (C87) | decrease in employment rates of eligible males (J68) |
| SPA introduction (C87) | stagnant employment rates of eligible females (J21) |
| SPA introduction (C87) | increase in joint absence from the labor market among eligible couples (J22) |