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Factors Affecting Labor Supply Decisions and Retirement Income

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  • Robin L. Lumsdaine

Abstract

Recent policy has focused on alleviating poverty among the elderly, with varying degrees of success. Gains to some subsets of the elderly population have come at the expense of others. A component of the policy debate has been identifying factors which might influence labor force participation decisions and the effects such decisions will have on retirement income and its adequacy for a growing elderly population. While models of retirement behavior are becoming increasingly sophisticated, most fail to capture key elements such as expectations and uncertainty. This is in part due to the reduced form nature of policy experiments; parameters are estimated under a current policy and used to predict effects of an alternative scenario. Such an approach implicitly assumes that the only difference in the alternative setting is the change in policy and does not adequately account for endogeneity of decisions and responses to these changes. This paper reviews factors affecting the labor supply decision, their interactions with and implications for subsequent retirement income, and identifies important methods and data requirements necessary to model complicated dynamic behavior more accurately.

Suggested Citation

  • Robin L. Lumsdaine, 1995. "Factors Affecting Labor Supply Decisions and Retirement Income," NBER Working Papers 5223, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5223 Note: AG
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    File URL: http://www.nber.org/papers/w5223.pdf
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. Hugo Benítez-Silva & J. Ignacio García-Pérez & Sergi Jiménez-Martín, 2011. "The effects of employment uncertainty and wealth shocks on the labor supply and claiming behavior of older American workers," Economics Working Papers 1275, Department of Economics and Business, Universitat Pompeu Fabra.
    2. John Janssen, 2002. "Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand," Treasury Working Paper Series 02/05, New Zealand Treasury.
    3. Hugo Benitez-Silva & Frank Heiland, 2008. "Early Retirement, Labor Supply, and Benefit Withholding: The Role of the Social Security Earnings Test," Working Papers wp183, University of Michigan, Michigan Retirement Research Center.
    4. Hugo Benitez-Silva & Debra S. Dwyer & Frank Heiland & Warren C. Sanderson, 2006. "Retirement and Social Security Reform Expectations: A Solution to the New Early Retirement Puzzle," Department of Economics Working Papers 06-05, Stony Brook University, Department of Economics.
    5. Ross Stolzenberg, 2011. "Do Not Go Gentle Into That Good Night: The Effect of Retirement on Subsequent Mortality of U.S. Supreme Court Justices, 1801–2006," Demography, Springer;Population Association of America (PAA), vol. 48(4), pages 1317-1346, November.
    6. H. Benitez-Silva & F. Heiland, 2008. "Early claiming of social security benefits and labour supply behaviour of older Americans," Applied Economics, Taylor & Francis Journals, vol. 40(23), pages 2969-2985.
    7. Ross Stolzenberg & James Lindgren, 2010. "Retirement and death in office of U.S. Supreme Court justices," Demography, Springer;Population Association of America (PAA), vol. 47(2), pages 269-298, May.
    8. Hugo Benitez-Silva, 2000. "Micro Determinants of Labor Force Status Among Older Americans," Department of Economics Working Papers 00-07, Stony Brook University, Department of Economics.

    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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