Abstract:

As a result of a 1991 change in legislation, rural Brazilian households were no longer limited to receiving only one pension per household as they were under the previous regime. Accordingly, the fraction of rural households receiving multiple pensions via a spouse increased by nearly 20 percentage points. In this paper, we examine the effect this sudden increase in spousal pensions had on household labor supply. Our results suggest that male heads of household significantly and substantially reduced their labor supply in response to receipt of pensions by their female spouses, however the effect was short-lived. These findings offer insight into the extent to which the unitary model of household behavior is useful as an explanatory tool.