Alan L. Gustman

A Structural Retirement Model

The model analyzed here constrains most work on the main job to be full time. Partial retirement requires a job change and a wage reduction.Estimates of utility function parameters and their distributions incorporate information on age of leaving the main job and of full retirement. These estimates determine the slope at different ages and the convexity of within period indifference curves between compensation and leisure. Even though age specific dummy variables are not used, the model closely tracks retirement behavior. Policy analysis based on earlier models with simpler structures is shown to be misleading.

Retirement in Dual‐Career Families: A Structural Model

A structural econometric model of retirement of dual‐career couples is specified and estimated with panel data from the National Longitudinal Survey of Mature Women. A coincidence of spouses retiring together, despite the younger ages of wives, suggests explicit efforts at coordination. The estimates suggest that one reason is a correlation of tastes for leisure. More important, each spouse, and perhaps husbands in particular, values retirement more once their spouse has retired. The opportunity set accounts for peaks in the retirement hazards of each spouse individually but not for peaks in the simultaneous retirement of both spouses.

Effects of pensions on savings: analysis with data from the health and retirement study

This paper examines the composition and distribution of total wealth for a cohort of 51 to 61 year olds from the Health and Retirement Study (HRS), and the role of pensions in forming retirement wealth. Pension coverage is widespread, covering two thirds of households and accounting for one quarter of accumulated wealth. Social security benefits account for another quarter of total wealth. As calculated from earnings records, the present disco value of social security benefits is less than the present value of taxes paid. Earlier than many expect, social security is already a poor investment on average for this cohort on the verge of retirement. Lifetime earnings are measured for each individual in the HRS from social security earnings records augmented by self reported earnings histories. This result is consistent with the predictions of a stripped down life cycle model. Also consistent is a finding that the ratio of wealth to lifetime earnings is no higher for those with pensions than for those without pensions. Multivariate regressions relating total wealth to pension coverage and pension value, suggest that pensions cause very limited displacement of other wealth, if any. Pensions add to total wealth by at least half the value of the pension, and in most estimates by a good deal more. These findings are not consistent with a simple life cycle explanation for savings. They also raise questions about whether pensions are fundamentally a tax avoidance device, allowing substitution of pension for nonpension savings.

THE ROLE OF PENSIONS IN THE LABOR MARKET: A SURVEY OF THE LITERATURE

Because employer-sponsored group pension plans entail agreements between workers and their employers explicitly linking future payment and employment, they offer an unusual window into long-term employment relationships. This review of recent research on pensions explores how pensions influence employee compensation, retirement, turnover, and other matters central to the determination of labors price and quantity over time. The authors also outline some unanswered questions and difficult-to-reconcile findings.

Pension portability and labor mobility : Evidence from the survey of income and program participation

The evidence presented in this paper casts doubt on the proposition that pension backloading is responsible for the low job mobility rates observed for pension covered workers. It corroborates earlier findings by the authors, based on different data, that pension covered jobs offer higher levels of compensation than workers can obtain elsewhere, and it is this compensation premium, rather than non-portability, that accounts for lower turnover among pension covered workers. This evidence is further bolstered by the finding that defined contribution plans, which are not backloaded, and defined benefit plans, bear similar negative relations to mobility.

EMPLOYER-PROVIDED HEALTH INSURANCE AND RETIREMENT BEHAVIOR

Using data from the 1969–79 Retirement History Study, the 1977 National Medical Care Expenditure Survey, the 1983–86 Survey of Consumer Finances, and the 1988 Current Population Survey, the authors analyze, with a structural retirement model, the effect on retirement of employer-provided health benefits. Such benefits, they find, tend to delay retirement until the age of eligibility and afterward to accelerate it. The net effect is small: employer-provided health benefits lowered male retirement age by only about 1.3 months. Valuing health benefits at the price of private health insurance to unaffiliated men, rather than at the cost to employers, increases the effect. Ignoring retiree health benefits in retirement models creates only a small bias.

The 1983 Social Security Reforms and Labor Supply Adjustments of Older Individuals in the Long Run

A structural life-cycle retirement model with an improved specification over previous models is used to analyze and compare the long-run effects on the labor supply of older workers of the 1983 Social Security reforms. The effects of separate provisions from the 1983 amendments are examined. These include the raising of the normal retirement age to 67, the increase in the delayed retirement credit to 8%, and the lowering of the reduction rate for earnings over the test amount to

Retirement Measures in the Health and Retirement Study

1.00 for every

HOW CHANGES IN SOCIAL SECURITY AFFECT RECENT RETIREMENT TRENDS

3.00 of earnings.

The Impact of Wages and Unemployment on Youth Enrollment and Labor Supply

This paper highlights unanswered research questions in the economics of retirement and shows how these questions can be addressed using the Health and Retirement Study (HRS). Unique features of the survey are described, including administrative records on earnings and Social Security benefits and employer-provided data on pensions and health insurance. Also collected by the survey are indicators of retirement plans, health status, family structure, income, wealth, and employer policies affecting job opportunities and constraints. Data from the first wave of the HRS are used to analyze retirement outcomes and constraints shaping retirement behavior.