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Private Wealth and Job Exit at Older Age: A Random Effects Model

  • Bloemen, Hans


    (Vrije Universiteit Amsterdam)

Private wealth holdings are likely to become an increasingly important determinant in the job exit decision of elderly workers. Net wealth may correlate with worker’s characteristics that also determine the exit out of a job. It is therefore important to include a rich set of observed characteristics in an empirical model for retirement in order to measure the (marginal) effect of wealth on the job exit rate. But even with a rich set of regressors the question remains whether there are unobservable worker’s characteristics that affect both net wealth and the job exit rate. We specify a simultaneous equations model for job exit transitions with multiple destinations, net wealth, and the initial labour market state. The job exit rates and the net wealth equation contain random effects. We allow for correlation between the random effects of job exit and net wealth, and the initial labour market state.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3386.

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Length: 40 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3386
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  1. Hans G. Bloemen, 2011. "The Effect of Private Wealth on the Retirement Rate: An Empirical Analysis," Economica, London School of Economics and Political Science, vol. 78(312), pages 637-655, October.
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  4. Gerard J. van den Berg & Maarten Lindeboom, 1998. "Attrition in Panel Survey Data and the Estimation of Multi-State Labor Market Models," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 458-478.
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  7. William Greene, 2004. "The behaviour of the maximum likelihood estimator of limited dependent variable models in the presence of fixed effects," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 98-119, 06.
  8. Bover, Olympia, 2006. "Wealth Effects on Consumption: Microeconometric Estimates from a New Survey of Household Finances," CEPR Discussion Papers 5874, C.E.P.R. Discussion Papers.
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  10. Bhargava, Alok & Sargan, J D, 1983. "Estimating Dynamic Random Effects Models from Panel Data Covering Short Time Periods," Econometrica, Econometric Society, vol. 51(6), pages 1635-59, November.
  11. Bloemen, Hans, 2006. "The Impact of Wealth on Job Exit Rates of Elderly Workers," IZA Discussion Papers 2247, Institute for the Study of Labor (IZA).
  12. Bloemen, Hans G., 2001. "Job search, search intensity and labour market transitions : an empirical analysis," Serie Research Memoranda 0037, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  13. Eric French, 2000. "The effects of health, wealth, and wages on labor supply and retirement behavior," Working Paper Series WP-00-2, Federal Reserve Bank of Chicago.
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  17. Steven F. Venti & David A. Wise, 1990. "Aging and the Income Value of Housing Wealth," NBER Working Papers 3547, National Bureau of Economic Research, Inc.
  18. Geoffrey H. Kingston, 2001. "Online Appendix to Efficient Timing of Retirement," Technical Appendices kingston00, Review of Economic Dynamics.
  19. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
  20. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-45, July.
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