We examine the effect of the partner allowance in the Dutch pension system on the retirement decisions of couples, using rich administrative data. The Partner allowance (PA) was paid to people who receive the old age pension (AOW) and whose partner was younger than the Statutory Retirement Age (SRA) and had low income from work. As of 1st April 2015, new old age pensioners are no longer entitled to this allowance. Using the cohort variation introduced by the reform and the age difference between spouses, we estimate the causal effect of this change in financial incentives on the retirement behaviour of each spouse. PA worked as a financial incentive to retire earlier, especially for the younger partners. We find asymmetries in the labour supply responses by gender. On the one hand, PA slightly increases older partners´ retirement probabilities at the SRA of 65 years and, particularly for men, at the typical peaks of early retirement. On the other hand, PA increases the female younger partner´s retirement exit probabilities close to the older partner´s SRA, while male younger partners do not respond to abolishing PA. |
