Kelly McCrudden Jessica Crawford George Findlay Pamela Ho Schirle, T Journal of Labor Economics, Vol. 26, No. 4 (October 2008), pp

Goal of the Study o To explain the increases in older men’s participation rates since the mid-1990s specifically looking at the United States, Canada and the United Kingdom o Do the wives increases in labor force participation decisions effect their husbands labor force participation decision?

Background to the Problem o Study focuses on older men, aged o Participation rates of these men has been progressively decreasing throughout the 20 th century (in OECD countries) o During mid-1990s participation rates of older men increased a significant amount o Older women’s participation rates has also been increasing

Participation Rates of Individuals Aged 55–64, By Sex, 1976

Participation Rates of Individuals Aged 55–64, By Sex

What We Can Expect o Income Effect Husbands can enjoy extra leisure time due to the increase in income with his wife working o Shared Leisure Effect Couples enjoy leisure time together Husbands may not like as much leisure time if their wife is working and they’re spend the time alone this would delay their retirement, and increase their labor force participation

Labor Supply Decision of Husbands and Wives wives utility: Estimate Model: Husband utility: depends on his consumption and labor force participation

Effect of Wives’ Participation  Probit models are used  Baseline estimates include: Husbands education Age Number of children in household  Results similar to estimated model May be smaller do to assortative matching

 Husbands of highly educated wives less likely to participate, therefore wives with high levels of education more likely to participate  Cohort effects largest among more educated women  Couples that both have high levels of education more likely to participate in the labour market than couples without the same level of education Continued

Robustness Checks and Other Factors To Consider o Health o Defined-benefit pension plans Unlikely that changes in pension coverage can explain the increase in participation o US stock market

Continued  Age difference between husbands and wives o Wife’s wage income o Different effects for different age groups o Younger married men vs. older married men

Decomposition of U.S. Participation Rates

DiNardo-Fortin-Lemieux Decomposition of Changes in Participation o Decomposition is sequential o Two stages of decomposition Hypothetical probability created Counterfactual probability created o Reverse order decomposition

DiNardo-Fortin-Lemieux Decomposition Results o Output uses 2 models for decomposition estimates: Probit Model Bivariate Probit Model o Varied results for United States, Canada, and the United Kingdom

Additional Evidence o Effect of changes in wives’ labour force participation o Effect of changes in men’s characteristics o Relax assumption of fixed husband’s participation decision

Historical Evidence o Hold age structure and educational attainment constant since 1980 o Participation Rates

Future Trends  Age and educational attainment work in opposite directions on the participation rate  Wives’ participation rate will work to increase the participation rate of their husbands  Overall, we can expect that participation will increase between 1.5% – 3%

Key Results  Participation rates increase as a result of: the increases in the participation rates of wives Increases in educational attainment Changes in the age structure

Results relevant for Public Policy CPP: EC306 handout #3