Labor supply of retiring couples and heterogeneity in household decision-making structure

Abstract: This paper analyzes the labor market participation behavior of retiring couples in Norway. To account for the unobserved heterogeneity in decision-making structure within the household, I formulate a mixed model by assuming there are two types of households, the cooperative type and the noncooperative type. I assume that non-cooperative households behave according to a Stackelberg game with the male as the leader, while cooperative households engage in a cooperative bargaining process. The estimation results show that more than half of the households are of the noncooperative type. Keywords: household labor supply, retirement, unobserved heterogeneity, mixed mode