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Endogenous Pensions and Retirement Behavior

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  • Randall Filer
  • Marjorie Honig

Abstract

This paper suggests that pension characteristics are simultaneously determined along with workers’ retirement ages. Both the age of pension eligibility and actual retirement age are determined by the productivity and marginal disutility of work, factors that are influenced by worker and job characteristics. This approach differs from previous studies of retirement that treat pensions as exogenous, implying that prior empirical work may have overestimated the responsiveness of retirement age to changes in pension structure, a possibility with obvious policy implications for efforts to raise the age of retirement. We find that, in the conventional single-equation framework, delaying the age of pension eligibility would significantly delay retirement. When treated in a recursive simultaneous system, however, age of pension eligibility retains no explanatory power.

Suggested Citation

  • Randall Filer & Marjorie Honig, 2005. "Endogenous Pensions and Retirement Behavior," CESifo Working Paper Series 1547, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1547
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    References listed on IDEAS

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    Cited by:

    1. Friedberg, Leora & webb, anthony, 2000. "The Impact of 401(k) Plans on Retirement," University of California at San Diego, Economics Working Paper Series qt2jr5w8b9, Department of Economics, UC San Diego.
    2. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    3. Belloni, Michele & Alessie, Rob, 2009. "The importance of financial incentives on retirement choices: New evidence for Italy," Labour Economics, Elsevier, vol. 16(5), pages 578-588, October.
    4. William H. Greene & David A. Hensher, 2008. "Modeling Ordered Choices: A Primer and Recent Developments," Working Papers 08-26, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Verbič, Miroslav & Spruk, Rok, 2011. "Aging population and public pensions: theory and evidence," MPRA Paper 38914, University Library of Munich, Germany.
    6. Heinemann, Friedrich & Hennighausen, Tanja & Moessinger, Marc-Daniel, 2011. "Intrinsic work motivation and pension reform acceptance," ZEW Discussion Papers 11-045, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    social security; early retirement; job characteristics; pension eligibility;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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