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Endogenous Pensions and Retirement Behavior

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Author Info
Randall K. Filer () (Hunter College, Department of Economics)
Marjorie Honig (Hunter College, Department of Economics)

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Abstract

This paper suggests that pension characteristics are simultaneously determined along with workers' retirement ages. Both the age of pension eligibility and actual retirement age are determined by the productivity and marginal disutility of work, factors that are influenced by worker and job characteristics. This approach differs from previous studies of retirement that treat pensions as exogenous, implying that prior empirical work may have overestimated the responsiveness of retirement age to changes in pension structure, a possibility with obvious policy implications for efforts to raise the age of retirement. We find that, in the conventional single-equation framework, delaying the age of pension eligibility would significantly delay retirement. When treated in a recursive simultaneous system, however, age of pension eligibility retains no explanatory power.

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Publisher Info
Paper provided by Hunter College: Department of Economics in its series Hunter College Department of Economics Working Papers with number 410.

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Length: 41
Date of creation: 2005
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Handle: RePEc:htr:hcecon:410

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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.:
  1. Marjorie Honig & Cordelia Reimers, 1987. "Retirement, Re-entry, and Part-time Work," Eastern Economic Journal, Palgrave Macmillan Journals, vol. 13(4), pages 361-371, Oct-Dec. [Downloadable!] (restricted)
  2. Marjorie Honig & Cordelia Reimers, 1987. "Retirement, Re-entry, and Part-time Work," Eastern Economic Journal, Eastern Economic Association, vol. 13(4), pages 361-371, Oct-Dec. [Downloadable!]
  3. Olivia S. Mitchell & Gary S. Fields, 1981. "The Effects of Pensions and Earnings on Retirement: A Review Essay," NBER Working Papers 0772, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. McManus, Douglas A., 1992. "How common is identification in parametric models?," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 5-23. [Downloadable!] (restricted)
  5. Keane, Michael P, 1992. "A Note on Identification in the Multinomial Probit Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(2), pages 193-200, April.
  6. E. Philip Davis, 1997. "Private Pensions in OECD Countries: The United Kingdom," OECD Labour Market and Social Policy Occasional Papers 21, OECD Directorate for Employment, Labour and Social Affairs. [Downloadable!]
  7. Woodland, A D, 1987. "Determinants of the Labour Force Status of the Aged," The Economic Record, The Economic Society of Australia, vol. 63(181), pages 97-114, June.
  8. Alan L. Gustman & Thomas L. Steinmeier, 1984. "Partial Retirement and the Analysis of Retirement Behavior," NBER Working Papers 0763, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Gustman, A.L. & Mitchell, O.S. & Steinmeier, T.L., 1993. "The Role of Pensions in the Labor Market," Papers 93-07, Cornell - Center for Advanced Human Resource Studies.
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  10. Blau, David M, 1994. "Labor Force Dynamics of Older Men," Econometrica, Econometric Society, vol. 62(1), pages 117-56, January. [Downloadable!] (restricted)
  11. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June. [Downloadable!] (restricted)
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  14. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Pension Plan Provisions and Retirement: Men & Women, Medicare, and Models," NBER Working Papers 4201, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Chan, Sewin & Stevens, Ann Huff, 2004. "Do changes in pension incentives affect retirement? A longitudinal study of subjective retirement expectations," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1307-1333, July. [Downloadable!] (restricted)
  16. Hanoch, Giora & Honig, Marjorie, 1983. "Retirement, Wages, and Labor Supply of the Elderly," Journal of Labor Economics, University of Chicago Press, vol. 1(2), pages 131-51, April. [Downloadable!] (restricted)
  17. Michael J. Boskin & Michael D. Hurd, 1980. "The Effect of Social Security on Early Retirement," NBER Working Papers 0204, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Barry T. Hirsch & David A. Macpherson & Melissa A. Hardy, 2000. "Occupational age structure and access for older workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 53(3), pages 401-418, April.
  19. Alan L. Gustman & Thomas L. Steinmeier, 1984. "Partial retirement and the analysis of retirement behavior," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 37(3), pages 403-415, April.
  20. Richard Blundell & Costas Meghir & Sarah Smith, 2002. "Pension Incentives and the Pattern of Early Retirement," Economic Journal, Royal Economic Society, vol. 112(478), pages C153-C170, March. [Downloadable!] (restricted)
  21. Stock, J.H. & Wise, D.A., 1988. "The Pension Inducement To Retire: An Option Value Analysis," Papers e-88-29, Stanford - Hoover Institution.
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  22. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
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  23. Laurence J. Kotlikoff & David A. Wise, 1987. "The Incentive Effects of Private Pension Plans," NBER Working Papers 1510, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  24. Michael Hurd & Kathleen McGarry, 1993. "The Relationship Between Job Characteristics and Retirement," NBER Working Papers 4558, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  25. Dale T. Mortensen, 1978. "Specific Capital and Labor Turnover," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 572-586, Autumn. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Leora Friedberg & Anthony Webb, 2000. "The Impact of 401(k) Plans on Retirement," University of California at San Diego, Economics Working Paper Series 2000-30, Department of Economics, UC San Diego. [Downloadable!]
  2. Michele Belloni & Rob Alessie, 2008. "The Importance of Financial Incentives on Retirement Choices," Tinbergen Institute Discussion Papers 08-052/3, Tinbergen Institute. [Downloadable!]
  3. Leora Friedberg & Anthony Webb, 2003. "Retirement and the Evolution of Pension Structure," NBER Working Papers 9999, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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