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.
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Paper provided by Wilfrid Laurier University, Department of Economics in its series Working Papers with number
eg0046.
Find related papers by 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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