In rural China, a husband's retirement actually forces his wife to work more hours rather than allowing them to relax together.
Low pension replacement rates mean that the household loses too much income when one person stops working. Standard economics assumes that spouses retire at the same time because they want to enjoy their newfound leisure together. This study shows that financial necessity overrides the desire for shared time. The wife must enter or stay in the workforce to fill the gap left by her husband's missing paycheck. Retirement for one person becomes a labor sentence for the other.
Displace Him, Deploy Her? Couple's Asymmetric Labor Responses to Pension Eligibility
SSRN · 4990244
This paper challenges the consensus that when one spouse retires, the other is more likely to retire as well because of their complementarities in leisure. We show theoretically that when pension replacement rates are low and households depend heavily on home production, one spouse’s retirement can instead increase the other spouse’s labor supply, as they substitute toward market work to offset lost earnings rather than toward shared leisure. Using a regression discontinuity design in rural Chin