A Dynamic Model with Endogenous Retirement: Existence of Multiple Steady States
AbstractThis paper extends Matsuyama's (2006) 0-1 endogenous-retirement choice in the second period to a framework with a continuous-endogenous-retirement choice to study consumption-saving decision and capital accumulation in an overlapping-generations model. The existence of the steady state is shown, and the conditions for the existence of multiple steady states are provided for both Matsuyama's (2006) 0-1 endogenous-retirement choice and the continuous-endogenous-retirement choice models, respectively. Different from Matsuyama's (2006) 0 or 1 labor choice (a full-time employee or a full-time retiree) in the steady state, a partial retirement may be a stable equilibrium under the continuous endogenous retirement choice in the second period. Therefore, partial retirement may be the optimal choice, and the retirement choice depends on the initial capital stock: if the initial capital stock is larger than a critical capital stock, then the individual will choose a relatively higher retirement level; if the initial capital stock is lower than a critical capital stock, then the individual will choose a relatively lower retirement level.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 561.
Length: 22 pages
Date of creation: 2006
Date of revision:
Overlapping-generations model; Endogenous retirement; Multiple steady states;
Find related papers by JEL classification:
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
- Dora L. Costa, 1998. "The Evolution of Retirement: An American Economic History, 1880-1990," NBER Books, National Bureau of Economic Research, Inc, number cost98-1.
- Matsuyama, Kiminori, 1992.
"Agricultural productivity, comparative advantage, and economic growth,"
Journal of Economic Theory,
Elsevier, vol. 58(2), pages 317-334, December.
- Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
- Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
- de la Croix,David & Michel,Philippe, 2002.
"A Theory of Economic Growth,"
Cambridge University Press, number 9780521806428, December.
- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
- repec:fth:stanho:e-92-3 is not listed on IDEAS
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao).
If references are entirely missing, you can add them using this form.