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A Collective Retirement Model: Identification and Estimation in the Presence of Externalities

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  • Michaud, P.C.
  • Vermeulen, F.M.P.

    (Tilburg University, Center for Economic Research)

Abstract

We study the labor supply dynamics of elderly couples by means of a structural collective model.The model allows for general externalities with respect to spouses leisure.Preferences and the intrahousehold bargaining process are identified by using panel data with couples and individuals who turned into widow(er)hood in the covered period.The model does not only look at the extensive margin (working versus being retired), but also at the intensive margin (how many hours are worked) and the claiming decision for social security benefits.We apply the model to American households coming from the first five waves of the Health and Retirement Study.We also provide model simulations for two widely discussed reform proposals; more specifically the abolition of the earnings test and the elimination of the spouse benefit.The model simulations reveal only small changes in labor supply of elderly couples.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2004-75.

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Date of creation: 2004
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Handle: RePEc:dgr:kubcen:200475

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Web page: http://center.uvt.nl

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Keywords: household economics; labour supply; social security; retirement; estimation; externalities;

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References

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  1. Michaud, Pierre-Carl, 2003. "Joint Labour Supply Dynamics of Older Couples," IZA Discussion Papers 832, Institute for the Study of Labor (IZA).
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  10. Michaud, P.C. & Soest, A.H.O. van, 2004. "Health and Wealth of Elderly Couples: Causality Tests Using Dynamic Panel Data Models," Discussion Paper 2004-81, Tilburg University, Center for Economic Research.
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Citations

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Cited by:
  1. Maria Casanova-Rivas, 2008. "Dynamic Complementarities: A Computational and Empirical Analysis of Couples' Retirement Decisions," 2008 Meeting Papers 1073, Society for Economic Dynamics.
  2. Kalwij, Adriaan & Vermeulen, Frederic, 2005. "Labour Force Participation of the Elderly in Europe: The Importance of Being Healthy," IZA Discussion Papers 1887, Institute for the Study of Labor (IZA).
  3. Bingley, Paul & Lanot, Gauthier, 2007. "Public pension programmes and the retirement of married couples in Denmark," Journal of Public Economics, Elsevier, vol. 91(10), pages 1878-1901, November.
  4. Peter Haan, 2007. "Intertemporal Labor Supply Effects of Tax Reforms," Discussion Papers of DIW Berlin 669, DIW Berlin, German Institute for Economic Research.
  5. Haan, Peter, 2010. "A Multi-state model of state dependence in labor supply: Intertemporal labor supply effects of a shift from joint to individual taxation," Labour Economics, Elsevier, vol. 17(2), pages 323-335, April.
  6. Haan, Peter & Uhlendorff, Arne, 2007. "Intertemporal Labor Supply and Involuntary Unemployment," IZA Discussion Papers 2888, Institute for the Study of Labor (IZA).
  7. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics.
  8. Peter Haan, 2005. "State Dependence and Female Labor Supply in Germany: The Extensive and the Intensive Margin," Discussion Papers of DIW Berlin 538, DIW Berlin, German Institute for Economic Research.
  9. Peter Haan, 2006. "Slowly, but Changing: How Does Genuine State Dependence Affect Female Labor Supply on the Extensive and Intensive Margin," JEPS Working Papers 06-002, JEPS.

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