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Retirement and Fixed Costs to Work: An Empirical Analysis

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  • Christophe Kolodziejczyk

    (Department of Economics, University of Copenhagen)

Abstract

In this paper we study consumption around the age of retirement. We consider a model where consumption and leisure are non-separable and retirement is endogenous. We consider the case where non-separabilities come from the existence of fixed costs to work. We show that the existence of unobserved heterogeneity related to these non-separabilities will lead to biases of the OLS estimators of structural parameters of demand systems conditioned on retirement. These estimates give bounds to the true fixed costs. We estimate the model with French data and compute the bounds of these structural parameters.

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File URL: http://www.econ.ku.dk/cam/wp0910/wp0406/2006-09.pdf/
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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2006-09.

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Length: 22 pages
Date of creation: Aug 2006
Date of revision:
Handle: RePEc:kud:kuieca:2006_09

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Keywords: retirement; fixed costs to work; correlated random coefficient model; bias;

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References

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  1. Hanoch, Giora & Honig, Marjorie, 1985. ""True" Age Profiles of Earnings: Adjusting for Censoring and for Period and Cohort Effects," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 383-94, August.
  2. Valerie Lechene & Martin Browning, 2002. "Children and Demand: Direct and Non-Direct Effects," Economics Series Working Papers 16, University of Oxford, Department of Economics.
  3. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-88, September.
  4. Didier Blanchet & Louis-Paul Pele, 1997. "Social Security and Retirement in France," NBER Working Papers 6214, National Bureau of Economic Research, Inc.
  5. Ronan Mahieu & Didier Blanchet, 2004. "Estimating Models of Retirement Behavior on French Data," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 235-284 National Bureau of Economic Research, Inc.
  6. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2003. "Is there a retirement consumption puzzle in Italy?," IFS Working Papers W03/14, Institute for Fiscal Studies.
  7. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
  8. Christophe Kolodziejczyk, 2006. "A Note on the Correlated Random Coefficient Model," CAM Working Papers 2006-10, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
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Cited by:
  1. Jorge González, 2008. "Commuting costs and labor force retirement," Working Papers. Serie AD 2008-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  2. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2010. "How does consumption change upon retirement?," Empirical Economics, Springer, vol. 38(2), pages 257-280, April.

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