Insured by the partner?
This paper investigates whether the partner’s social insurance coverage affects spousal labor supply. Using a reform which increased the sickness insurance coverage for non-government workers, the spousal elasticity of sick days with respect to the partner’s benefit is estimated to 0.4. Additional analysis indicates that the partner’s insurance coverage is partly affecting spousal labor supply through an insurance effect and the overall effect is particularly large among low income families. Joint leisure is not found to have an effect on the overall effect. We conclude that spouses pool their supply of labor. Thus if policy evaluations ignore spousal interactions they will underestimate the effect.
Keywords: Spousal labor supply, spill-over, social insurance programs
JEL-codes: H31, J22