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A Mixture Model of Household Retirement Choice

  • Jia, Zhiyang

    ()

    (Dept. of Economics, University of Oslo)

This paper analyzes the labor market participation behavior of the elderly couples when a new option (early retirement) becomes available to the husband. Unlike other studies of household labor supply model, which assume that all the households follow the same decision making structure, we assume there are two types of household, the cooperative type and the non-cooperative type. When facing the choice problem, those belong to the non-cooperative type behave according to a Stackelberg game with male as the leader, while those of the cooperative type follow a simple unitary model. Under this assumption, we formulate a mixture model using the latent class analysis framework. This model explicitly takes account of the unobserved heterogeneity in decision making structures. The empirical estimation of the model is based on register data from Statistics Norway. We find that more than half of the households belong to the non-cooperative type. And these households on average have lower education level than those of the cooperative type. Our conjecture is that this may suggest that it is easier for higher education couples to communicate and compromise to reach a efficient solution.

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File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2003/Memo-04-2003.pdf
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 04/2003.

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Length: 21 pages
Date of creation: 09 Apr 2003
Date of revision:
Handle: RePEc:hhs:osloec:2003_004
Contact details of provider: Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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  1. Erik Hernæs & Zhiyang Jia & Steinar Strøm, 2007. "Retirement in Non-Cooperative and Cooperative Families," Chapters, in: Ageing and the Labor Market in Japan, chapter 7 Edward Elgar.
  2. Michael D. Hurd, 1990. "The Joint Retirement Decision of Husbands and Wives," NBER Chapters, in: Issues in the Economics of Aging, pages 231-258 National Bureau of Economic Research, Inc.
  3. Bergstrom, T.C., 1993. "A Survey of Theories of the Family," Papers 93-02, Michigan - Center for Research on Economic & Social Theory.
  4. Hiedemann, Bridget, 1998. "A Stackelberg model of Social Security acceptance decisions in dual career households," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 263-278, February.
  5. Bourguignon, F. & Chiappori, P-A., 1991. "Collective Models of Household Behaviour: An Introduction," DELTA Working Papers 91-29, DELTA (Ecole normale supérieure).
  6. Bresnahan, Timothy F. & Reiss, Peter C., 1991. "Empirical models of discrete games," Journal of Econometrics, Elsevier, vol. 48(1-2), pages 57-81.
  7. Chen, Zhiqi & Woolley, Frances, 2001. "A Cournot-Nash Model of Family Decision Making," Economic Journal, Royal Economic Society, vol. 111(474), pages 722-48, October.
  8. Kooreman, Peter, 1994. "Estimation of Econometric Models of Some Discrete Games," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(3), pages 255-68, July-Sept.
  9. Chesher, Andrew & Santos Silva, J M C, 2002. "Taste Variation in Discrete Choice Models," Review of Economic Studies, Wiley Blackwell, vol. 69(1), pages 147-68, January.
  10. Lundberg, Shelly & Pollak, Robert A, 1994. "Noncooperative Bargaining Models of Marriage," American Economic Review, American Economic Association, vol. 84(2), pages 132-37, May.
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