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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

    ()
    (University of Québec at Montréal)

  • Vermeulen, Frederic

    ()
    (Tilburg University)

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 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
Date of revision:
Publication status: published in: Labour Economics, 2011, 18 (2), 159-167
Handle: RePEc:iza:izadps:dp1294

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

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References

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  1. Coile, Courtney & Diamond, Peter & Gruber, Jonathan & Jousten, Alain, 2002. "Delays in claiming social security benefits," Journal of Public Economics, Elsevier, vol. 84(3), pages 357-385, June.
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Citations

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Cited by:
  1. Peter Haan, 2007. "Intertemporal Labor Supply Effects of Tax Reforms," Discussion Papers of DIW Berlin 669, DIW Berlin, German Institute for Economic Research.
  2. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics.
  3. 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.
  4. Kalwij, A.S. & Vermeulen, F.M.P., 2005. "Labour Force Participation of the Elderly in Europe: The Importance of Being Healthy," Discussion Paper 2005-130, Tilburg University, Center for Economic Research.
  5. Haan, Peter & Uhlendorff, Arne, 2007. "Intertemporal Labor Supply and Involuntary Unemployment," IZA Discussion Papers 2888, Institute for the Study of Labor (IZA).
  6. Maria Casanova-Rivas, 2008. "Dynamic Complementarities: A Computational and Empirical Analysis of Couples' Retirement Decisions," 2008 Meeting Papers 1073, Society for Economic Dynamics.
  7. 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.
  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. 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.

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