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How Sensitive Are Retirement Decisions to Financial Incentives: A Stated Preference Analysis

  • Voňková, Hana

    ()

    (Tilburg University)

  • van Soest, Arthur

    ()

    (Tilburg University)

We study effects of financial incentives on the retirement age using stated preference data. Dutch survey respondents were given hypothetical retirement scenarios describing age(s) of (partial and full) retirement and replacement rate(s). A structural model is estimated in which utility is the discounted sum of within period utilities that depend on employment status and income. Parameters of the utility function vary with observed and unobserved characteristics. Simulations show that the income and substitution effects of pensions as a function of the retirement age are substantial and larger than according to studies using data on actual retirement decisions.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4505.

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Length: 41 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4505
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  1. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
  2. repec:dgr:kubcen:200858 is not listed on IDEAS
  3. Arthur van Soest & Arie Kapteyn & Julie Zissimopoulos, 2006. "Using Stated Preferences Data to Analyze Preferences for Full and Partial Retirement," Working Papers 345, RAND Corporation Publications Department.
  4. Jonathan Gruber & Kevin Milligan & David A. Wise, 2010. "Introduction and Summary," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 1-45 National Bureau of Economic Research, Inc.
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  5. Jeffrey R. Brown & Courtney C. Coile & Scott J. Weisbenner, 2006. "The Effect of Inheritance Receipt on Retirement," NBER Working Papers 12386, National Bureau of Economic Research, Inc.
  6. repec:cup:cbooks:9780521788304 is not listed on IDEAS
  7. Mauro Mastrogiacomo & Rob Alessie & Maarten Lindeboom, 2004. "Retirement behaviour of Dutch elderly households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 777-793.
  8. Klaas de Vos & Arie Kapteyn, 2004. "Incentives and Exit Routes to Retirement in the Netherlands," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 461-498 National Bureau of Economic Research, Inc.
  9. Lumsdaine, Robin L. & Mitchell, Olivia S., 1999. "New developments in the economic analysis of retirement," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 49, pages 3261-3307 Elsevier.
  10. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 537-79, May.
  11. Monika Queisser & Edward R. Whitehouse, 2006. "Neutral or Fair?: Actuarial Concepts and Pension-System Design," OECD Social, Employment and Migration Working Papers 40, OECD Publishing.
  12. Arjan Heyma, 2004. "A structural dynamic analysis of retirement behaviour in the Netherlands," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 739-759.
  13. Jan Kakes & Dirk Broeders, 2006. "The sustainability of the Dutch pension system," DNB Occasional Studies 406, Netherlands Central Bank, Research Department.
  14. van Dalen, H.P. & Henkens, K. & Hershey, D.A., 2008. "Are Pension Savings sufficient? Perceptions and Expectations of American and Dutch Workers," Discussion Paper 2008-58, Tilburg University, Center for Economic Research.
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