Retirement Decisions in Recessionary Times: Evidence from Spain

Abstract

Abstract The recession that started in the United States in December 2007 has had a significant impact on the Spanish economy through a large increase of the unemployment rate and the bursting of the housing and financial bubbles. We explore how the crisis and changes in the labor, housing, and financial markets might have impacted retirement patterns of Spanish men and women nearing retirement age. We find that the recession primarily reduced women’s retirement likelihood by 27%. The effect, which was associated with the labor market deterioration, as captured by higher unemployment rates, was circumscribed to women already at work, who chose to stay at work longer. In contrast, for the most part, men’s retirement likelihood did not change with the labor, housing, and financial market fluctuations. Overall, the findings suggest that working women might have prolonged their working lives to make up for lost household income.