Retirement incentives and couple's retirement decisions in Brazil

In this paper we investigate labor force participation and retirement patterns of couples in Brazil using data from the Brazilian Household Survey from 2003 to 2008. Brazil is an interesting case study because of its rapid population aging, large public pension system and early retirement trends. More specifically, we examine how social security incentives and personal characteristics affect one's own and spouses' labor force participation and retirement decisions. Our results suggest that couples synchronize retirement and that they respond similarly to their own characteristics. We also find that wives are more responsive to husbands' incentives than vice versa. Based on the estimates, we simulate different rules to the pension system and their impacts on retirement trends. We observe that setting a minimum retirement age would increase the probability of both being in the labor force for longer periods of time. In addition, the results have important implications for public pension policy evaluation in Brazil and other developing countries.