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Employer Compensation Policies, Public Transfer Programmes and Retirement Decisions

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Author Info

  • Paul Bingley
  • Gauthier Lanot

Abstract

The empirical retirement literature measures individual responses to variation in income flows due to public transfers, private individual or employer-provided pensions. The novelty of this paper is to provide a decomposition the incentive effects from these three sources. It is the first time that the effects of pay policies of different employers on retirement outcomes is explicitly modelled and empirically measured.Amodel of individual retirement is set up where employers may influence worker retirement age through pay policy. A conventional dynamic structural model is extended to allow both individual and employer heterogeneity. Empirically, identification of the employer effects on income and retirement is achieved by exploiting a longitudinal sample of Danish small-to-medium sized private sector establishments matched together with all of their workers. Identification of the effect of public transfers on income and retirement is through exogenous eligibility rules and reforms to a public early retirement programme. Employer specific compensation is found to be an important determinant of work and retirement income flows. However, employer effects on retirement age are only found among subsamples where access to public transfers is relatively limited.

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Bibliographic Info

Paper provided by Department of Economics, Keele University in its series Keele Department of Economics Discussion Papers (1995-2001) with number 99/01.

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Date of creation: 1999
Date of revision: Jun 2000
Publication status: Published in European Economic Review, February, 2004, Vol 48(1), pages 181-200.
Handle: RePEc:kee:keeldp:99/01

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Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
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Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Department of Economics, Keele University, Keele, Staffordshire ST5 5BG - United Kingdom
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Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

Related research

Keywords: Retirement; pensions; matched employer-employee panel data.;

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References

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  1. repec:att:wimass:9430 is not listed on IDEAS
  2. Bartel, Ann P & Sicherman, Nachum, 1993. "Technological Change and Retirement Decisions of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 162-83, January.
  3. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Three Models of Retirement: Computational Complexity Versus Predictive Validity," NBER Working Papers 3558, National Bureau of Economic Research, Inc.
  4. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-49, September.
  5. Stern, Steven, 1994. "Ability, Promotion, and Optimal Retirement," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 119-37, January.
  6. 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.
  7. Pederson, P. J. & Schmidt-Sorensen, J. B. & Smith, N. & Westergard-Nielsen, N., 1990. "Wage differentials between the public and private sectors," Journal of Public Economics, Elsevier, vol. 41(1), pages 125-145, February.
  8. Robin C. Sickles & Paul J. Taubman, 1984. "An Analysis of the Health and Retirement Status of the Elderly," NBER Working Papers 1459, National Bureau of Economic Research, Inc.
  9. Olivia S. Mitchell, . "New Trends in Pension Benefit and Retirement Provisions," Pension Research Council Working Papers 2000-1, Wharton School Pension Research Council, University of Pennsylvania.
  10. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May.
  11. Alan L. Gustman & Thomas L. Steinmeier, 1998. "Changing Pensions in Cross-Section and Panel Data: Analysis with Employer Provided Plan Descriptions," NBER Working Papers 6854, National Bureau of Economic Research, Inc.
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