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Another Look at the Identification of Dynamic Discrete Decision Processes: With an Application to Retirement Behavior

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  • Victor Aguirregabiria

    () (Department of Economics Boston University)

Abstract

This paper presents a method to estimate the effects of a counterfactual policy intervention in the context of dynamic structural models where all the structural functions (i.e., preferences, technology, transition probabilities, and the distribution of unobservable variables) are nonparametrically specified. We show that agents' behavior, before and after the policy intervention, and the change in agents' utility are nonparametrically identified. Based on this result we propose a nonparametric procedure to estimate the behavioral and welfare effects of a general class of counterfactual policy interventions. We apply this method to evaluate hypothetical reforms in the rules of a public pension system using a model of retirement behavior and a sample of blue-collar workers in Sweden

Suggested Citation

  • Victor Aguirregabiria, 2006. "Another Look at the Identification of Dynamic Discrete Decision Processes: With an Application to Retirement Behavior," 2006 Meeting Papers 169, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:169
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    Cited by:

    1. Aguirregabiria, Victor & Mira, Pedro, 2010. "Dynamic discrete choice structural models: A survey," Journal of Econometrics, Elsevier, vol. 156(1), pages 38-67, May.

    More about this item

    Keywords

    Dynamic discrete decision processes; Nonparametric identification; Counterfactual policy interventions; Retirement behavior.;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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