IDEAS home Printed from https://ideas.repec.org/p/ema/worpap/2018-04.html
   My bibliography  Save this paper

Early retirement decisions: Lessons from a dynamic structural modelling

Author

Listed:
  • Eric Delattre
  • Richard Moussa

    (Université de Cergy-Pontoise, THEMA)

Abstract

Early retirement has many causes according to economic and sociological literature. These causes may be the preference for leisure, nancial and health conditions, and social environment. In our paper, we aim to specify and estimate an econometric model to assess the early retirement decision-making process for aged workers. We specify a worker's utility function from which we derive worker's probability to retire earlier that depends on her health stock, estate value and preference for future. We also estimate an health production and an health consumption functions that are key factors in the individual's decision to retire earlier. Thus, we show that our model disentangles between three groups of workers: (i) those who choose early retirement, (ii) those who will never choose early retirement and (iii) those who are uncertain about early retirement. We also show that our predicted early retirement probability is a good predictor of early retirement as it is causal for observed early retirement.

Suggested Citation

  • Eric Delattre & Richard Moussa, 2018. "Early retirement decisions: Lessons from a dynamic structural modelling," THEMA Working Papers 2018-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2018-04
    as

    Download full text from publisher

    File URL: http://thema.u-cergy.fr/IMG/pdf/2018-04.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. A. Peyrache & A. N. Rambaldi, 2012. "A State-Space Stochastic Frontier Panel Data Model," CEPA Working Papers Series WP012012, School of Economics, University of Queensland, Australia.
    2. Paula Albuquerque & Manuela Arcanjo & Vítor Escária, 2009. "Early Retirement in Portugal," Working Papers Department of Economics 2009/39, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    3. Piet De Jong, 1991. "Stable Algorithms For The State Space Model," Journal of Time Series Analysis, Wiley Blackwell, vol. 12(2), pages 143-157, March.
    4. Sergi Jiménez‐Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "A sequential model of older workers' labor force transitions after a health shock," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 1033-1054, September.
    5. Coe, Norma B. & Zamarro, Gema, 2011. "Retirement effects on health in Europe," Journal of Health Economics, Elsevier, vol. 30(1), pages 77-86, January.
    6. Coe, Norma B. & Zamarro, Gema, 2011. "Retirement effects on health in Europe," Journal of Health Economics, Elsevier, pages 77-86.
    7. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(1), pages 39-72.
    8. Joseph F. Quinn, 1977. "Microeconomic Determinants of Early Retirement: A Cross-Sectional View of White Married Men," Journal of Human Resources, University of Wisconsin Press, vol. 12(3), pages 329-346.
    9. Michael Grossman, 1999. "The Human Capital Model of the Demand for Health," NBER Working Papers 7078, National Bureau of Economic Research, Inc.
    10. Lixin Cai & Kostas Mavromaras & Umut Oguzoglu, 2014. "The Effects Of Health Status And Health Shocks On Hours Worked," Health Economics, John Wiley & Sons, Ltd., vol. 23(5), pages 516-528, May.
    11. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    12. Gloria J. Bazzoli, 1985. "The Early Retirement Decision: New Empirical Evidence on the Influence of Health," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 214-234.
    13. Catherine Pollak, 2012. "Employed and Happy despite Weak Health? Labour Market Participation and Job Quality of Older Workers with Disabilities," Working Papers DT45, IRDES institut for research and information in health economics, revised Mar 2012.
    14. David Dorn & Alfonso Sousa-Poza, 2005. "The Determinants of Early Retirement in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(II), pages 247-283, June.
    15. Thierry Debrand, 2011. "L’influence des conditions de travail sur les dépenses de santé," Working Papers DT41, IRDES institut for research and information in health economics, revised Mar 2011.
    16. Titus Galama & Arie Kapteyn & Raquel Fonseca & Pierre‐Carl Michaud, 2013. "A Health Production Model With Endogenous Retirement," Health Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 883-902, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas Barnay, 2016. "Health, work and working conditions: a review of the European economic literature," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(6), pages 693-709, July.
    2. Volker Grossmann & Holger Strulik, 2019. "Optimal Social Insurance and Health Inequality," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 913-948, November.
    3. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2015. "Optimal choice of health and retirement in a life-cycle model," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 186-212.
    4. Eibich, Peter & Goldzahl, Léontine, 2021. "Does retirement affect secondary preventive care use? Evidence from breast cancer screening," Economics & Human Biology, Elsevier, vol. 43(C).
    5. Cai, Lixin, 2010. "The relationship between health and labour force participation: Evidence from a panel data simultaneous equation model," Labour Economics, Elsevier, vol. 17(1), pages 77-90, January.
    6. Coe, N.B. & Lindeboom, M., 2008. "Does Retirement Kill You? Evidence from Early Retirement Windows," Discussion Paper 2008-93, Tilburg University, Center for Economic Research.
    7. Halliday, Timothy J. & He, Hui & Ning, Lei & Zhang, Hao, 2019. "Health Investment Over The Life-Cycle," Macroeconomic Dynamics, Cambridge University Press, vol. 23(1), pages 178-215, January.
    8. Pelgrin, Florian & St-Amour, Pascal, 2016. "Life cycle responses to health insurance status," Journal of Health Economics, Elsevier, vol. 49(C), pages 76-96.
    9. Behncke S, 2009. "How Does Retirement Affect Health?," Health, Econometrics and Data Group (HEDG) Working Papers 09/11, HEDG, c/o Department of Economics, University of York.
    10. Lixin Cai & Guyonne Kalb, 2007. "Health status and labour force status of older working-age Australian men," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(4), pages 227-252.
    11. Eric Delattre & Richard K. Moussa & Mareva Sabatier, 2019. "Health condition and job status interactions: econometric evidence of causality from a French longitudinal survey," Health Economics Review, Springer, vol. 9(1), pages 1-18, December.
    12. Bethencourt, Carlos & Galasso, Vincenzo, 2008. "Political complements in the welfare state: Health care and social security," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 609-632, April.
    13. Carl-Johan Dalgaard & Holger Strulik, 2017. "The Genesis of the Golden Age: Accounting for the Rise in Health and Leisure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 132-151, March.
    14. Claudio Lucifora & Daria Vigani, 2018. "Health care utilization at retirement: The role of the opportunity cost of time," Health Economics, John Wiley & Sons, Ltd., vol. 27(12), pages 2030-2050, December.
    15. Pierre-Jean Messe & François-Charles Wolff, 2019. "Healthier when retiring earlier? Evidence from France," Applied Economics, Taylor & Francis Journals, vol. 51(47), pages 5122-5143, October.
    16. Burggraf, Christine, 2017. "Russian demand for dietary quality: Nutrition transition, diet quality measurement, and health investment theory," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 86, number 86.
    17. Maarten Lindeboom, 2012. "Health and Work of Older Workers," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 3, Edward Elgar Publishing.
    18. Titus Galama & Arie Kapteyn & Raquel Fonseca Benito & Pierre-Carl Michaud, 2009. "Grossman's Health Threshold and Retirement," Working Papers 658, RAND Corporation.
    19. Burggraf, Christine, 2017. "Russian demand for dietary quality: Nutrition transition, diet quality measurement, and health investment theory," Studies on the Agricultural and Food Sector in Transition Economies 269539, Institute of Agricultural Development in Transition Economies (IAMO).
    20. repec:zbw:iamost:269539 is not listed on IDEAS
    21. Declan French, 2012. "Causation between health and income: a need to panic," Empirical Economics, Springer, vol. 42(2), pages 583-601, April.

    More about this item

    Keywords

    Early retirement; Grossmann Model; Space-state model; Causality;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ema:worpap:2018-04. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefania Marcassa (email available below). General contact details of provider: https://edirc.repec.org/data/themafr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.