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Retirement and Fixed Costs to Work: An Empirical Analysis


  • Christophe Kolodziejczyk

    (Department of Economics, University of Copenhagen)


In this paper we study consumption around the age of retirement. We consider a model where consumption and leisure are non-separable and retirement is endogenous. We consider the case where non-separabilities come from the existence of fixed costs to work. We show that the existence of unobserved heterogeneity related to these non-separabilities will lead to biases of the OLS estimators of structural parameters of demand systems conditioned on retirement. These estimates give bounds to the true fixed costs. We estimate the model with French data and compute the bounds of these structural parameters.

Suggested Citation

  • Christophe Kolodziejczyk, 2006. "Retirement and Fixed Costs to Work: An Empirical Analysis," CAM Working Papers 2006-09, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  • Handle: RePEc:kud:kuieca:2006_09

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    References listed on IDEAS

    1. Mette Christensen, 2008. "Demand patterns around retirement: Evidence from Spanish panel data," The School of Economics Discussion Paper Series 0809, Economics, The University of Manchester.
    2. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-788, September.
    3. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    4. Raffaelle Miniaci & Chiara Monfardini & Guglielmo Weber, 2003. "Is there a retirement consumption puzzle in Italy?," IFS Working Papers W03/14, Institute for Fiscal Studies.
    5. Christophe Kolodziejczyk, 2006. "A Note on the Correlated Random Coefficient Model," CAM Working Papers 2006-10, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    6. Martin Browning & Valérie Lechene, 2003. "Children and Demand: Direct and Non-Direct Effects," Review of Economics of the Household, Springer, vol. 1(1), pages 9-31, January.
    7. Ronan Mahieu & Didier Blanchet, 2004. "Estimating Models of Retirement Behavior on French Data," NBER Chapters,in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 235-284 National Bureau of Economic Research, Inc.
    8. Hanoch, Giora & Honig, Marjorie, 1985. ""True" Age Profiles of Earnings: Adjusting for Censoring and for Period and Cohort Effects," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 383-394, August.
    9. Didier Blanchet & Louis-Paul Pele, 1999. "Social Security and Retirement in France," NBER Chapters,in: Social Security and Retirement around the World, pages 101-133 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jorge González, 2008. "Commuting costs and labor force retirement," Working Papers. Serie AD 2008-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2010. "How does consumption change upon retirement?," Empirical Economics, Springer, vol. 38(2), pages 257-280, April.

    More about this item


    retirement; fixed costs to work; correlated random coefficient model; bias;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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