This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

A Dynamic Programming Model of Retirement Behavior

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
John Rust

Additional information is available for the following registered author(s):

Abstract

This paper formulates a model of retirement behavior based on the solution to a stochastic dynamic programming problem. The workers objective is to maximize expected discounted utility over his remaining lifetime. At each time period the worker chooses how much to consume and whether to work full-time, part-time, or exit the labor force. The model accounts for the sequential nature f the retirement decision problem, and the role of expectations of uncertain future variables such as the worker's future lifespan, health status, marital and family status, employment status, as well as earnings from employment, assets, and social security retirement, disability and medicare payments. This paper applies a "nested fixed point" algorithm that converts the dynamic programming problem into the problem of repeatedly recomputing the fixed point to a contraction mapping operator as a subroutine of a standard nonlinear maximum likelihood program. The goal of the paper is to demonstrate that a fairly complex and realistic formulation of the retirement problem can be estimated using this algorithm and a current generation supercomputer, the Cray-2.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w2470.pdf
File Format: application/pdf
File Function:
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2470.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation: Dec 1987
Date of revision:
Publication status: published as The Economics of Aging, ed. by David Wise, University of Chicago Press, March 1990.
Handle: RePEc:nbr:nberwo:2470

Note: AG
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

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. Richard V. Burkhauser & Timothy M. Smeeding, 2000. "Microdata Panel Data and Public Policy: National and Cross-National Perspectives," Center for Policy Research Working Papers 23, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  2. Euwals, Rob & van Vuuren, Daniel & Wolthoff, Ronald, 2006. "Early Retirement Behaviour in the Netherlands - Evidence from a Policy Reform," CEPR Discussion Papers 5596, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Burkhauser, Richard V. & Butler, J. S. & Gulcin Gumus, 2003. "Option Value and Dynamic Programming Model Estimates of Social Security Disability Insurance Application Timing," IZA Discussion Papers 941, Institute for the Study of Labor (IZA). [Downloadable!]
  4. David A. Wise & Robin L. Lumsdaine, 1990. "Aging and Labor Force Participation: A Review of Trends and Explanations," NBER Working Papers 3420, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. 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:
  6. Richard V. Burkhauser & J. S. Butler & Gulcin Gumus, 2004. "Dynamic programming model estimates of Social Security Disability Insurance application timing," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 671-685. [Downloadable!]
  7. Arjan Heyma, 2004. "A structural dynamic analysis of retirement behaviour in the Netherlands," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 739-759. [Downloadable!]
  8. Sewin Chan & Ann Huff Stevens, 1999. "Job Loss and Retirement Behavior of Older Men," Departmental Working Papers 199823, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  9. 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)
  10. Isao Ohashi, 2004. "Wages, Hours of Work and Job Satisfaction of the Elderly," Hi-Stat Discussion Paper Series d04-40, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  11. Grzegorz Kula, 2003. "Retirement with Perfect Insurance," Tinbergen Institute Discussion Papers 03-097/3, Tinbergen Institute. [Downloadable!]
  12. Alan L. Gustman & F. Thomas Juster, 1995. "Income and Wealth of Older American Households: Modeling Issues for Public Policy Analysis," NBER Working Papers 4996, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Alan L. Gustman & Thomas L. Steinmeier, 2002. "Retirement and the Stock Market Bubble," NBER Working Papers 9404, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Zhiyang Jia, 2005. "Retirement Behavior of Working Couples in Norway. A Dynamic Programming Approach," Discussion Papers 405, Research Department of Statistics Norway. [Downloadable!]
  15. Andrew A. Samwick, 1998. "New Evidence on Pensions, Social Security, and the Timing of Retirement," NBER Working Papers 6534, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  16. Sewin Chan & Ann Huff Stevens, 1999. "Employment and Retirement Following a Late-Career Job Loss," American Economic Review, American Economic Association, vol. 89(2), pages 211-216, May. [Downloadable!] (restricted)
    Other versions:
  17. Debra Sabatini Dwyer & Olivia S. Mitchell, 1998. "Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?," NBER Working Papers 6503, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  18. Sewin Chan & Ann Huff Stevens, 2001. "Retirement Incentives and Expectations," NBER Working Papers 8082, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Pension Plan Provisions and Retirement: Men & Women, Medicare, and Models," NBER Working Papers 4201, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Federico Biagi & Danilo Cavapozzi & Raffaele Miniaci, 2007. "Technology, Skills and Retirement," "Marco Fanno" Working Papers 0042, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
  21. Anne Møller Danø & Mette Ejrnæs & Leif Husted, 2004. "Do Single Women Value Early Retirement more than Single Men?," CAM Working Papers 2004-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics. [Downloadable!]
  22. Hugo Benitez-Silva, . "Micro Determinants of Labor Force Status Among Older Americans," Department of Economics Working Papers 00-07, SUNY-Stony Brook, Department of Economics. [Downloadable!]
  23. James H. Stock & David A. Wise, 1988. "Pensions, The Option Value of Work, and Retirement," NBER Working Papers 2686, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  24. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1995. "Why are Retirement Rates So High at Age 65?," NBER Working Papers 5190, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Statistics
Access and download statistics

Did you know? The most prolific authors have over 700 items listed on IDEAS.

This page was last updated on 2009-7-3.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.