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Pension Plan Provisions and Retirement: Men & Women, Medicare, and Models

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  • Robin L. Lumsdaine
  • James H. Stock
  • David A. Wise

Abstract

The ongoing analysis of the effects of pension plan provisions on retirement is pursued in this paper. A primary objective of this paper is to test the validity of models previously developed and estimated with data from a Fortune 500 company, here using data from a second large company. The evidence confirms that changes in the retirement rates by age correspond closely to provisions of the firm pension plan. There is essentially no difference in the retirement behavior of men and women. As in previous work, it is found that simpler "option value model" of retirement yields very similar results to the considerably more complex stochastic dynamic programming specification. Both fit the data well and predict rather well the effect on retirement of a special retirement window plan, Some consideration is also given to the effects of firm health insurance and median coverage on retirement.

Suggested Citation

  • Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Pension Plan Provisions and Retirement: Men & Women, Medicare, and Models," NBER Working Papers 4201, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4201
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    References listed on IDEAS

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    1. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Three Models of Retirement: Computational Complexity versus Predictive Validity," NBER Chapters,in: Topics in the Economics of Aging, pages 21-60 National Bureau of Economic Research, Inc.
    2. Edward P. Lazear, 1983. "Pensions as Severance Pay," NBER Chapters,in: Financial Aspects of the United States Pension System, pages 57-90 National Bureau of Economic Research, Inc.
    3. Jeremy I. Bulow, 1981. "Early Retirement Pension Benefits," NBER Working Papers 0654, National Bureau of Economic Research, Inc.
    4. Lumsdaine, Robin L. & Stock, James H. & Wise, David A., 1990. "Efficient windows and labor force reduction," Journal of Public Economics, Elsevier, vol. 43(2), pages 131-159, November.
    5. John P. Rust, 1989. "A Dynamic Programming Model of Retirement Behavior," NBER Chapters,in: The Economics of Aging, pages 359-404 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Petra Todd & Kenneth I. Wolpin, 2002. "Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico," PIER Working Paper Archive 03-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2003.
    2. Randall K. Filer & Marjorie Honig, 2005. "Endogenous Pensions and Retirement Behavior," Economics Working Paper Archive at Hunter College 410, Hunter College Department of Economics.
    3. David M. Blau & Donna B. Gilleskie, 2001. "Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 64-80, February.
    4. Eric French & John Bailey Jones, 2011. "The Effects of Health Insurance and Self‐Insurance on Retirement Behavior," Econometrica, Econometric Society, vol. 79(3), pages 693-732, May.
    5. Shawn Ni & Michael Podgursky, 2016. "How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 1075-1104.
    6. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    7. Alan L. Gustman & Thomas L. Steinmeier, 1994. "Employer-Provided Health Insurance and Retirement Behavior," ILR Review, Cornell University, ILR School, vol. 48(1), pages 124-140, October.
    8. Petra E. Todd & Kenneth I. Wolpin, 2006. "Ex Ante Evaluation of Social Programs," PIER Working Paper Archive 06-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    9. van der Klaauw, Wilbert & Wolpin, Kenneth I., 2008. "Social security and the retirement and savings behavior of low-income households," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 21-42, July.
    10. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
    11. Robert L. Clark & Joseph F. Quinn, 1999. "Effects of Pensions on Labor Markets and Retirement," Boston College Working Papers in Economics 431, Boston College Department of Economics.
    12. Joshua Congdon-Hohman, 2006. "The Impact of Health Insurance Availability on Retirement Decision Reversals," Working Papers wp137, University of Michigan, Michigan Retirement Research Center.
    13. David M. Blau & Donna B. Gilleskie, 2008. "The Role Of Retiree Health Insurance In The Employment Behavior Of Older Men," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 475-514, May.
    14. Jonathan Gruber & Brigitte C. Madrian, 1996. "Health Insurance and Early Retirement: Evidence from the Availability of Continuation Coverage," NBER Chapters,in: Advances in the Economics of Aging, pages 115-146 National Bureau of Economic Research, Inc.
    15. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "Retirement Research Using the Health and Retirement Survey," NBER Working Papers 4813, National Bureau of Economic Research, Inc.
    16. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.

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