DEPARTMENT OF ECONOMICS WORKING PAPER SERIES 2007 - 03 EC : Why Have the Labour Force Participation Rates of Older Men Increased Since the Mid - 1990 s ?

This paper seeks to explain the substantial increases in older men’s labour force participation rates that have been observed since the mid-1990s. Using data from the U.S. March Current Population Survey, the Canadian Labour Force Survey, and the U.K. Labour Force Survey, I investigate the hypothesis that husbands treat the leisure time of their wives as complementary to their own leisure at older ages. I exploit the cohort effects driving recent increases in older women’s participation rates to identify the effect of a wife’s participation decision on her husband’s participation decision. Given this complementarity in leisure time, a large portion of the increase in older men’s participation rates may be explained as a response to the recent increases in older women’s participation in the labour force. The methodology of Dinardo, Fortin, and Lemieux (1996) is used to decompose the changes in older married men’s participation rates, demonstrating that increases in wives’ participation in the labour force can explain roughly one quarter of the recent increase in participation in the U.S., almost one half of the recent increase in participation in Canada, and roughly one third of the recent increase in the U.K. Older men’s educational attainment is also an important factor explaining recent increases in participation, yet cannot be expected to drive further increases in participation rates. In contrast, expected increases in older wives’ participation over the next decade are expected to drive further increases in older men’s participation rates. I would like to thank Nicole Fortin, Thomas Lemieux, Kevin Milligan, and participants of the Empirical lunch series at the University of British Columbia for their comments and suggestions. Portions of the statistical analysis in this paper rely on Statistics Canada microdata, made available through the British Columbia Inter-University Research Data Centre. This study reflects the views of the author and does not reflect the views of Statistics Canada. Correspondence Tammy Schirle, Department of Economics, Wilfrid Laurier University, 75 University Ave W., Waterloo, Ontario, Canada N2L 3C5 E-mail: [email protected] Tel: +1 (519) 884-0710 ext.3849