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A Collective Retirement Model : Identification and Estimation in the Presence of Externalities

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  • Michaud, P.C.

    (Tilburg University, School of Economics and Management)

  • Vermeulen, F.M.P.

    (Tilburg University, School of Economics and Management)

Abstract

We study the labor supply dynamics of elderly couples by means of a structural collective model. The model allows for general externalities with respect to spouses' leisure. Preferences and the intrahousehold bargaining process are identified by using panel data with couples and individuals who turned into widow(er)hood in the covered period. The model does not only look at the extensive margin (working versus being retired), but also at the intensive margin (how many hours are worked) and the claiming decision for social security benefits. We apply the model to American households coming from the first five waves of the Health and Retirement Study. We also provide model simulations for two widely discussed reform proposals; more specifically the abolition of the earnings test and the elimination of the spouse benefit. The model simulations reveal only small changes in labor supply of elderly couples.
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  • Michaud, P.C. & Vermeulen, F.M.P., 2004. "A Collective Retirement Model : Identification and Estimation in the Presence of Externalities," Other publications TiSEM fb0bfe30-b1e3-4b61-9bf2-1, Tilburg University, School of Economics and Management.
  • Handle: RePEc:tiu:tiutis:fb0bfe30-b1e3-4b61-9bf2-11c35cc00833
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    Cited by:

    1. Maria Casanova-Rivas, 2008. "Dynamic Complementarities: A Computational and Empirical Analysis of Couples' Retirement Decisions," 2008 Meeting Papers 1073, Society for Economic Dynamics.
    2. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics.
    3. Paul Bingley & Gauthier Lanot, 2007. "Public Pension Programmes and the Retirement of Married Couples in Denmark," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1878-1901, National Bureau of Economic Research, Inc.
    4. Lalive, Rafael & Parrotta, Pierpaolo, 2017. "How does pension eligibility affect labor supply in couples?," Labour Economics, Elsevier, vol. 46(C), pages 177-188.
    5. Laura Hospido & Gema Zamarro, 2014. "Retirement patterns of couples in Europe," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-18, December.
    6. Kalwij, A.S. & Vermeulen, F.M.P., 2005. "Labour Force Participation of the Elderly in Europe : The Importance of Being Healthy," Other publications TiSEM c00729b8-27dc-42f8-9fba-0, Tilburg University, School of Economics and Management.
    7. Peter Haan, 2006. "Slowly, but Changing: How Does Genuine State Dependence Affect Female Labor Supply on the Extensive and Intensive Margin," JEPS Working Papers 06-002, JEPS.
    8. Haan, Peter, 2010. "A Multi-state model of state dependence in labor supply: Intertemporal labor supply effects of a shift from joint to individual taxation," Labour Economics, Elsevier, vol. 17(2), pages 323-335, April.
    9. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    10. Peter Haan, 2005. "State Dependence and Female Labor Supply in Germany: The Extensive and the Intensive Margin," Discussion Papers of DIW Berlin 538, DIW Berlin, German Institute for Economic Research.
    11. Peter Haan & Arne Uhlendorff, 2013. "Intertemporal labor supply and involuntary unemployment," Empirical Economics, Springer, vol. 44(2), pages 661-683, April.
    12. Peter Haan, 2007. "Intertemporal Labor Supply Effects of Tax Reforms," Discussion Papers of DIW Berlin 669, DIW Berlin, German Institute for Economic Research.

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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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