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Option Value of Work, Health Status, and Retirement Decisions in Japan: Evidence from the Japanese Study on Aging and Retirement (JSTAR)

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  • Satoshi Shimizutani
  • Takashi Oshio
  • Mayu Fujii

Abstract

This study examined the factors that affect the retirement decisions of the middle-aged and elderly in Japan, focusing especially on their earnings, public pension benefits, and health status. Using two-year panel data from the JSTAR and applying the OV model proposed by Stock and Wise (1990a, 1990b), we found that the probability of retirement has a negative and significant correlation with the OV of work, and that correlation does not depend on the health status. Our counter-factual simulation based on the OV model showed that, if the probability of being enrolled in the disability program were zero, the average years of work when individuals are in their 50s and 60s would increase. However, it should be emphasized that, in Japan—where being enrolled in the disability program is unlikely to make one a candidate for the retirement path—the result of this simulation does not indicate that satisfying the eligibility criteria for disability pension receipts will more stringently increase the labor supplied by the middle-aged and elderly.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20001.

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Date of creation: Mar 2014
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Publication status: Forthcoming: Option Value of Work, Health Status, and Retirement Decisions in Japan: Evidence from the Japanese Study on Aging and Retirement (JSTAR) , Satoshi Shimizutani, Mayu Fujii, Takashi Oshio. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement , Wise. 2014
Handle: RePEc:nbr:nberwo:20001

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References

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  1. Shimizutani, Satoshi & Oshio, Takashi, 2012. "Public Pension Benefits Claiming Behavior: New Evidence from the Japanese Study on Aging and Retirement," CIS Discussion paper series, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University 573, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  2. Takashi Oshio & Akiko Sato Oishi & Satoshi Shimizutani, 2011. "Social Security Reforms And Labour Force Participation Of The Elderly In Japan," The Japanese Economic Review, Japanese Economic Association, Japanese Economic Association, vol. 62(2), pages 248-271, 06.
  3. ICHIMURA Hidehiko & SHIMIZUTANI Satoshi & HASHIMOTO Hideki, 2009. "JSTAR First Results 2009 Report," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09047, Research Institute of Economy, Trade and Industry (RIETI).
  4. Shimizutani, Satoshi, 2009. "Social Security Earnings Test and the Labor Supply of the Elderly: New Evidence from Unique Survey Responses in Japan," PIE/CIS Discussion Paper, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University 429, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  5. SHIMIZUTANI Satoshi & OSHIO Takashi, 2013. "Revisiting the Labor Supply Effect of Social Security Earnings Test: New evidence from its elimination and reinstatement in Japan," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 13016, Research Institute of Economy, Trade and Industry (RIETI).
  6. James M. Poterba & Steven F. Venti & David A. Wise, 2011. "Family Status Transitions, Latent Health, and the Post-Retirement Evolution of Assets," NBER Chapters, in: Explorations in the Economics of Aging, pages 23-69 National Bureau of Economic Research, Inc.
  7. ICHIMURA Hidehiko & SHIMIZUTANI Satoshi, 2011. "Retirement Process in Japan: New evidence from Japanese Study on Aging and Retirement (JSTAR)," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 11080, Research Institute of Economy, Trade and Industry (RIETI).
  8. David A. Wise, 1990. "Issues in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise90-1.
  9. Takashi Oshio & Satoshi Shimizutani & Akiko Sato Oishi, 2010. "Does Social Security Induce Withdrawal of the Old from the Labor Force and Create Jobs for the Young? The Case of Japan," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 217-241 National Bureau of Economic Research, Inc.
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