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Social Security, Pensions and Retirement Behavior Within the Family

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  • Alan L. Gustman
  • Thomas L. Steinmeier

Abstract

This paper estimates a structural model of family retirement using U.S. data from the Health and Retirement Study (HRS) and from the National Longitudinal Survey of Mature Women. Estimates using the HRS benefit from having, for each spouse, earnings histories provided by the respondent and the Social Security Administration, and employer provided pension plan descriptions. We find that a measure of how much each spouse values being able to spend time in retirement with the other accounts for a good portion of the apparent interdependence of the retirement decisions of husbands and wives. When we include this measure, the simulations almost double the frequency of predicted joint retirements. Once estimated, we use the model to investigate the labor supply effects of alternative social security policies, examining the effect of dividing credit for earnings evenly between spouses, or of basing social security benefits on the amounts accumulated in private accounts. Both policies change the relative importance of spouse and survivor social security benefits within the household and both raise the relative reward to work later in the life cycle. The incentives created are modest, and retirement responds accordingly. Nevertheless, at some ages, such as 65, there may be as much as a 6 percent increase in the old age work force under privatized accounts.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8772.

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Date of creation: Feb 2002
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Publication status: published as Gustman, Alan L. and Thomas L. Steinmeier. "Social Security, Pensions And Retirement Behavior Within The Family," Journal of Applied Econometrics, 2004, v19(6,Spec), 723-737.
Handle: RePEc:nbr:nberwo:8772

Note: AG LS PE
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  1. David M, Blau & Donna B, Gilleskie, 2003. "Health Insurance and Retirement of Married Couples," Working Papers, Centre de Recherche en Economie et Statistique 2003-41, Centre de Recherche en Economie et Statistique.
  2. John Bailey Jones & Eric French, 2010. "The Effects of Health Insurance and Self-Insurance on Retirement Behavior," Discussion Papers, University at Albany, SUNY, Department of Economics 10-10, University at Albany, SUNY, Department of Economics.
  3. Gustman, Alan L. & Steinmeier, Thomas L., 2001. "How effective is redistribution under the social security benefit formula?," Journal of Public Economics, Elsevier, Elsevier, vol. 82(1), pages 1-28, October.
  4. Gary S. Fields & Olivia S. Mitchell, 1984. "Retirement, Pensions, and Social Security," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262060914, December.
  5. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(3), pages 503-45, July.
  6. Ippolito, Richard A., 1998. "Pension Plans and Employee Performance," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226384559, June.
  7. Berkovec, James & Stern, Steven, 1991. "Job Exit Behavior of Older Men," Econometrica, Econometric Society, Econometric Society, vol. 59(1), pages 189-210, January.
  8. Alan L. Gustman & Thomas L. Steinmeier, 1983. "A Structural Retirement Model," NBER Working Papers 1237, National Bureau of Economic Research, Inc.
  9. Gale, William G, 1994. "Public Policies and Private Pension Contributions," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 26(3), pages 710-32, August.
  10. Olivia S. Mitchell, 1987. "Worker Knowledge of Pension Provisions," NBER Working Papers 2414, National Bureau of Economic Research, Inc.
  11. Lumsdaine, Robin L. & Stock, James H. & Wise, David A., 1990. "Efficient windows and labor force reduction," Journal of Public Economics, Elsevier, Elsevier, vol. 43(2), pages 131-159, November.
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