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

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Author Info
Michaud, Pierre-Carl () (CentER, Tilburg University and IZA Bonn)
Vermeulen, Frederic (CentER, Tilburg University)

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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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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1294.

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Length: 46 pages
Date of creation: Sep 2004
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Handle: RePEc:iza:izadps:dp1294

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Related research
Keywords: collective household models; labor supply; retirement; social security; identification;

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Find related papers by JEL classification:
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

References listed on IDEAS
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. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June. [Downloadable!] (restricted)
    Other versions:
  2. Lumsdaine, Robin L. & Mitchell, Olivia S., 1999. "New developments in the economic analysis of retirement," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 49, pages 3261-3307 Elsevier. [Downloadable!] (restricted)
    Other versions:
  3. Robert A. Moffitt, 2003. "The Negative Income Tax and the Evolution of U.S. Welfare Policy," NBER Working Papers 9751, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Personal Accounts and Family Retirement," NBER Working Papers 10305, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Haider, S. & Solon, G., 2000. "Nonrandom Selection in the HRS Social Security Earnings Sample," Papers 00-01, RAND - Labor and Population Program.
    Other versions:
  6. Michaud, P.C., 2003. "Joint labour supply dynamics of older couples," Discussion Paper 69, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  7. Alan L. Gustman & Thomas L. Steinmeier, 2002. "Social Security, Pensions and Retirement Behavior Within the Family," NBER Working Papers 8772, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Jonathan Gruber & David A. Wise, 2002. "Social Security Programs and Retirement Around the World: Micro Estimation," NBER Working Papers 9407, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Alan L. Gustman & Thomas L. Steinmeier, 1986. "A Structural Retirement Model," NBER Working Papers 1237, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Jonathan Gruber & Peter Orszag, 2000. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," NBER Working Papers 7923, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. repec:att:wimass:199430 is not listed on IDEAS
  12. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July. [Downloadable!] (restricted)
  13. Laurens Cherchye & Frederic Vermeulen, 2003. "Nonparametric Analysis of Household Labour Supply: Goodness-of-Fit and Power of the Unitary and the Collective Model," Public Economics Working Paper Series ces0302, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics. [Downloadable!]
    Other versions:
  14. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Structural Retirement Model," Econometrica, Econometric Society, vol. 54(3), pages 555-84, May. [Downloadable!] (restricted)
  16. Hajivassiliou, Vassilis & McFadden, Daniel & Ruud, Paul, 1996. "Simulation of multivariate normal rectangle probabilities and their derivatives theoretical and computational results," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 85-134. [Downloadable!] (restricted)
    Other versions:
  17. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Courtney Coile, 2003. "Retirement Incentives And Couples' Retirement Decisions," Working Papers, Center for Retirement Research at Boston College 2003-04, Center for Retirement Research. [Downloadable!]
  19. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February. [Downloadable!] (restricted)
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  20. Bourguignon, F. & Browning, M. & Chiappori, P. A., 1995. "The Collective Approach to Household Behaviour," DELTA Working Papers 95-04, DELTA (Ecole normale supérieure).
  21. Leora Friedberg, 2000. "The Labor Supply Effects of the Social Security Earnings Test," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 48-63, February. [Downloadable!] (restricted)
  22. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Personal Accounts and Family Retirement," Working Papers wp067, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
  23. Courtney Coile & Jonathan Gruber, 2000. "Social Security Incentives for Retirement," NBER Working Papers 7651, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  24. Courtney Coile & Peter Diamond & Jonathan Gruber & Alain Jousten, 1999. "Delays in Claiming Social Security Benefits," NBER Working Papers 7318, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  25. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
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  26. Heckman, James J & Willis, Robert J, 1977. "A Beta-logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 27-58, February. [Downloadable!] (restricted)
    Other versions:
  27. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-45, July. [Downloadable!] (restricted)
  28. Michaud, P.C. & Soest, A.H.O. van, 2004. "Health and wealth of elderly couples : causality tests using dynamic panel data," Discussion Paper 81, Tilburg University, Center for Economic Research. [Downloadable!]
  29. Donna B. Gilleskie & David M. Blau, 2006. "Health insurance and retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 935-953. [Downloadable!]
  30. Courtney Coile, 2003. "Retirement Incentives and Couples' Retirement Decisions," NBER Working Papers 9496, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  31. John Rust & Christopher Phelan, 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Public Economics 9406005, EconWPA, revised 06 Jul 1994. [Downloadable!]
    Other versions:
  32. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, vol. 107(443), pages 933-55, July. [Downloadable!] (restricted)
  33. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January. [Downloadable!] (restricted)
  34. Blau, David M., 1997. "Social security and the labor supply of older married couples," Labour Economics, Elsevier, vol. 4(4), pages 373-418, December. [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. Paul Bingley & Gauthier Lanot, 2006. "Public Pension Programmes and the Retirement of Married Couples in Denmark," Keele Economics Research Papers KERP 2006/20, Centre for Economic Research, Keele University. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!]
  3. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics. [Downloadable!]
  4. Adriaan Kalwij & Frederic Vermeulen, 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). [Downloadable!]
    Other versions:
  5. Peter Haan, 2007. "Intertemporal Labor Supply Effects of Tax Reforms," Discussion Papers of DIW Berlin 669, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  6. 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. [Downloadable!]
  7. Peter Haan & Arne Uhlendorff, 2007. "Intertemporal Labor Supply and Involuntary Unemployment," IZA Discussion Papers 2888, Institute for the Study of Labor (IZA). [Downloadable!]
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