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Health, Pensions, and the Retirement Decision: Evidence from Canada

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Abstract

Using longitudinal data from the Canadian Survey of Labour and Income Dynamics, I use an option value framework to examine the effects of health and employer provided pensions on retirement decisions. This study fills existing gaps in the literature by jointly modeling the impact of financial incentives and health on the retirement decisions of Canadians. The results indicate that both factors have substantial and significant effects on retirement, as having poor health increases the likelihood of entering retirement by up to 25 percentage points. Given the longitudinal aspect of the data, I am also able to address several identification issues discussed in the literature. The results corroborate previous evidence regarding the relative importance of attenuation and justification bias in self-reported health measures. The results also confirm U.S. and European evidence that employer-provided pensions and health are significant determinants of retirement.

Suggested Citation

  • T. Schirle, 2007. "Health, Pensions, and the Retirement Decision: Evidence from Canada," Working Papers eg0046, Wilfrid Laurier University, Department of Economics, revised 2007.
    • Handle: RePEc:wlu:wpaper:eg0046
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    Cited by:

    1. Queiroz, Bernardo L. & Souza, Laeticia R., 2017. "Retirement incentives and couple’s retirement decisions in Brazil," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 1-13.
    2. Pérez, Carlos & Martín-Román, Ángel & Moral, Alfonso, 2020. "Two decades of the complementary leisure effect in Spain," The Journal of the Economics of Ageing, Elsevier, vol. 15(C).
    3. Pierre Lefebvre & Philip Merrigan & Pierre-Carl Michaud, 2011. "The Recent Evolution of Retirement Patterns in Canada," Social and Economic Dimensions of an Aging Population Research Papers 287, McMaster University.
    4. Kevin Milligan & Tammy Schirle, 2017. "Health Capacity to Work at Older Ages: Evidence from Canada," NBER Chapters, in: Social Security Programs and Retirement around the World: The Capacity to Work at Older Ages, pages 59-83, National Bureau of Economic Research, Inc.
    5. Kevin Milligan & Tammy Schirle, 2018. "The Labor Force Participation of Older Men in Canada," NBER Chapters, in: Social Security Programs and Retirement around the World: Working Longer, pages 51-65, National Bureau of Economic Research, Inc.
    6. Tammy Schirle, 2008. "Why Have the Labor Force Participation Rates of Older Men Increased since the Mid-1990s?," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 549-594, October.

    More about this item

    Keywords

    Retirement; Private Pensions; Health;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I10 - Health, Education, and Welfare - - Health - - - General

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