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Retirement Incentives and Labor Supply

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Abstract

In this chapter, we review the evidence on retirement and study the role of incentives in the retirement decision. The key patterns of withdrawal from the labor market are presented and some of the factors that might explain the large and discrete drops in hours of work at the point of “retirement” are presented. We study the main retirement incentives that individuals face and place these financial and other incentives in the context of a structural approach to modeling retirement. We use this approach to frame issues of how government and private pension schemes affect retirement behavior. Noting that the typical household nearing retirement today in most developed economies is one in which both husband and wife work, we examine the theory and evidence on modeling incentives in couples and for joint decision-making. We conclude with a discussion of some of the gaps in our understanding of the employment of the elderly and raise some central questions that should be addressed by future research.

Suggested Citation

  • Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, Elsevier.
  • Handle: RePEc:eee:hapoch:v1_457
    DOI: 10.1016/bs.hespa.2016.10.001
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    Cited by:

    1. Eric French & John Bailey Jones, 2017. "Health, Health Insurance, and Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 383-409, September.
    2. Damon Jones & Alexander M. Gelber & Daniel W. Sacks & Jae Song, 2017. "Using Kinked Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Social Security Earnings Test," Working Papers 2017-034, Human Capital and Economic Opportunity Working Group.
    3. Oriol Carbonell-Nicolau & Humberto Llavador, 2018. "Inequality Reducing Properties of Income Tax Schedules," Working Papers 1015, Barcelona Graduate School of Economics.
    4. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2016. "A Structural Analysis of the Effects of the Great Recession on Retirement and Working Longer by Members of Two-Earner Households," NBER Working Papers 22984, National Bureau of Economic Research, Inc.
    5. repec:eee:pubeco:v:159:y:2018:i:c:p:128-145 is not listed on IDEAS
    6. Jing You & Miguel Niño-Zarazúa, 2017. "Smoothing or strengthening the ‘Great Gatsby Curve’? The intergenerational impact of China’s New Rural Pension Scheme," WIDER Working Paper Series 199, World Institute for Development Economic Research (UNU-WIDER).
    7. Richard Blundell & Jack Britton & Monica Costa Dias & Eric French, 2016. "The Dynamic Effects of Health on the Employment of Older Workers," Working Papers wp348, University of Michigan, Michigan Retirement Research Center.
    8. Jones, John Bailey & Li, Yue, 2017. "The Effects of Collecting Income Taxes on Social Security Benefits," Working Paper 17-2, Federal Reserve Bank of Richmond.
    9. Oriol Carbonell-Nicolau & Humberto Llavador, 2018. "Further Results on the Inequality Reducing Properties of Income Tax Schedules," Departmental Working Papers 201801, Rutgers University, Department of Economics.

    More about this item

    Keywords

    Retirement; Aging; Labor supply; Pensions; Retirement models; H55 (social security and public pensions); I38 (government policy; provision and effects of welfare programs); J08 (labor economics policies); J14 (economics of the elderly); J26 (retirement; retirement policies); J32 (nonwage labor costs and benefits; retirement plans; private pensions);

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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