Retirement, financial incentives and health
This paper aims to assess empirically the relative size of incentive effects and health for the retirement decision. We specify and estimate a dynamic model for retirement behaviour that explicitly takes account of eligibility conditions and replacement rates of alternative exit routes from the labour force, and health. A range of health instruments are constructed from estimates of a model for health dynamics and these are used to assess the effect of reporting errors and of endogeneity of health on the estimates of the retirement model. Our results provide evidence that health and retirement are endogenously related. Health matters but the size of the health effect depends crucially on the health measure used. We find that subjective health measures overstate the effect of health on retirement and that endogeneity of health suppresses the health effect. Incentive effects are relatively insensitive to alternative specifications for health. The incentive effects are strong for Early Retirement schemes. There is evidence that income streams in alternative exit routes are compared in the retirement decision and that alternative exit routes act as substitutes.
|Date of creation:||1998|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.feweb.vu.nl|
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"The Dynamic Effects of Health on the Labor Force Transitions of Older Workers,"
NBER Working Papers
6777, National Bureau of Economic Research, Inc.
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National Bureau of Economic Research, Inc.
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- Kathryn H. Anderson & Richard V. Burkhauser, 1985. "The Retirement-Health Nexus: A New Measure of an Old Puzzle," Journal of Human Resources, University of Wisconsin Press, vol. 20(3), pages 315-330.
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