Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2010:3: Insured by the partner?

Martin Olsson () and Peter Skogman Thoursie ()
Additional contact information
Martin Olsson: Stockholm University, Department of Economics, Postal: S-106 91 Stockholm, Sweden
Peter Skogman Thoursie: IFAU - Institute for Labour Market Policy Evaluation, Postal: Box 513, SE-751 20 Uppsala, Sweden

Abstract: 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 la-bor. 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

24 pages, March 5, 2010

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