Retirement behavior of working couples in Norway. A dynamic programming approach

Abstract: This paper aims to provide an empirical analysis of the joint retirement behavior of working couples in Norway. A dynamic programming model is specified and estimated on micro data. The estimation results show that a model, which uses only measures of economic incentives: wages and pension benefits gives a satisfactory fit to the observed retirement pattern. The results also indicate that husbands have higher bargaining power within the household. A hypothetical policy simulation shows that by taxing pension benefits as wage income, the labor market participation of both husbands and wives will increase around 4 percentage points at age 65