Allocation of time and resources by married couples approaching retirement

The work and retirement decisions of husbands and wives are likely to be made jointly as they allocate their available resources. This article models the allocation of family wealth and family members' time over the lifetime of the unit. The first section reports simulation results that illustrate the relationship between the value of members' time in both market work and the production of home services. The model is then tested by means of the Retirement History Study for 1969-73. The estimation is conducted by employing a simultaneous logit model of labor-force participation by the husband and wife. Principal findings are: (1) Individuals respond positively to increases in their own wage rate but tend to reduce labor-force participation as the wage rate of their spouse increases, (2) the health of the husband is an important determinant of his labor-force participation, and (3) the probability that a person will be in the labor force is raised if the spouse is employed.