This paper specifies and estimates a structural model of the retirement decisions of husbands and wives. The feature of the data that is of central interest to us is the tendency of husbands and wives to retire together. An economic approach is developed for estimating preferences of both spouses jointly and is implemented using data from the National Longitudinal Survey of Mature Women (NLS), a survey that provides the most recent data available for a joint retirement study. Alternative specifications of joint decision making are tested, and the importance of various sources of interdependence in decision making are investigated.
The present analysis joins together two branches of the retirement literature. In one, structural retirement models are estimated from data on individuals, usually men, while ignoring the retirement decisions and retirement status of their spouse. In the other, retirement decisions of husbands and wives, and the tendency of their retirement dates to cluster, are analyzed in the context of a reduced form model.
To join these strands of the literature, this paper extends structural retirement modeling to incorporate the joint determination of retirement decisions of husbands and wives.