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Another Look at the Identification of Dynamic Discrete Decision Processes: With an Application to Retirement Behavior

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Author Info
Victor Aguirregabiria () (Department of Economics Boston University)

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Abstract

This paper presents a method to estimate the effects of a counterfactual policy intervention in the context of dynamic structural models where all the structural functions (i.e., preferences, technology, transition probabilities, and the distribution of unobservable variables) are nonparametrically specified. We show that agents' behavior, before and after the policy intervention, and the change in agents' utility are nonparametrically identified. Based on this result we propose a nonparametric procedure to estimate the behavioral and welfare effects of a general class of counterfactual policy interventions. We apply this method to evaluate hypothetical reforms in the rules of a public pension system using a model of retirement behavior and a sample of blue-collar workers in Sweden

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Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 169.

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Date of creation: 03 Dec 2006
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Handle: RePEc:red:sed006:169

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Related research
Keywords: Dynamic discrete decision processes; Nonparametric identification; Counterfactual policy interventions; Retirement behavior.;

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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References listed on IDEAS
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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. Victor Aguirregabiria & Pedro mira, 2007. "Dynamic Discrete Choice Structural Models: A Survey," Working Papers tecipa-297, University of Toronto, Department of Economics. [Downloadable!]
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