The Effect of Health Events and Health Insurance on Couples' Labor Supply Decisions

Health status and the availability of retiree health insurance are well known to be crucial factors in retirement decision-making. However, researchers have typically used an individual framework to model the retirement decision and have often ignored the potentially important role of the spouse s health status and of potential access to health insurance in retirement through the spouse in explaining retirement behavior. This paper follows McClellan (1998) in focusing on negative health events rather than health status, as the latter may be endogenous with respect to retirement, but extends the previous work to look at the effect of health shocks on the spouse s labor supply.