Labour Market and Retirement Interactions: A new perspective on employment for older workers (Studies of Policy Reform)

This volumes examines the interaction of labour market conditions and retirement decisions. Based on French and US data, it provides empirical evidence and quantitative analysis of retirement and labor market flows. It studies the horizon effect and uses French individual data and probit models to show that the horizon effect does matter for the probability of being employed before the early retirement age. It analyses the influence of the retirement age on labour-market equilibrium, as well as the impact of labour market conditions, especially the importance of unemployment risk, on retirement decisions. Cover 1 Labour Market and Retirement Interactions 4 Copyright 5 Contents 6 List of Figures 8 List of Tables 10 List of Contributors 12 1: Introduction 14 1.1 The Traditional Dichotomic View 16 1.1.1 Older-Worker (Low) Employment 16 1.1.2 Retirement Decisions 18 1.2 Focusing on a New Approach Based on Search Models of the Labour Market 19 1.2.1 The Influence of Retirement Age on Labour Market Flows 19 1.2.2 The Influence of Labour Market Status on Retirement Age 22 References 24 2: Horizon Effect and Older Workers ́ Employment: An Examination of the French Labour Force Survey 28 2.1 Introduction 28 2.2 Empirical Strategy 29 2.3 A Preliminary Strategy (Strategy I) 31 2.4 Identifying the Horizon Effect (Strategy II) 33 2.A Empirical Evidence 36 2.5 Conclusion 35 References 41 3: The Indirect Impact of Pension Systems on Employment prior to the Minimal Retirement Age: A New Estimation 42 3.1 The Statistical Model 42 3.2 Administrative Data on French Pensioners 44 3.3 Measuring the Impact of Retirement on Employment 46 3.4 Results 48 3.5 Conclusion 49 References 51 4: Are Unemployed Workers More Likely to Retire? 52 4.1 Introduction 52 4.2 Descriptive Analysis 54 4.2.1 Labour Force Status: Elements of Definition 54 4.2.2 Partly Retired Individuals vs their Searching and Working Counterparts 56 4.2.3 Transition to Retirement 58 4.3 Econometric Analysis 59 4.3.1 Probit Models 59 4.3.2 Propensity Score-Matching Approach 62 Implementation. 62 Results of the matching model. 63 Assessing the matching quality. 64 4.4 Conclusion 66 4.A Matching Methodology 67 4.B Probit Regressions 68 References 68 5: Reforming the US Social Security System: Accounting for Employment Uncertainty 70 5.1 Introduction and Motivation 70 5.2 Stylized Facts Regarding Retirement 73 5.3 Methodology and the Dynamic Model 77 5.3.1 The Value Functions 80 5.3.2 Other Details of the Model 81 5.3.3 Solving and Simulating the Model 83 5.4 Simulation Results 84 5.5 Policy Experiments 87 5.5.1 Claiming Behaviour by Employment Status 91 5.5.2 Budgetary Consequences of the Policy Experiments 94 5.6 Conclusions 95 5.A Social Security Incentives for Early Retirementin the United States 96 5.A.1 Benefit Calculation 97 5.A.2 Actuarial Reduction Factor 98 5.A.3 Earnings Test 98 5.B Model Calibration 100 References 100 Subject Index 104 Name Index 106 Content: Cover Labour Market and Retirement Interactions Copyright Contents List of Figures List of Tables List of Contributors 1: Introduction 1.1 The Traditional Dichotomic View 1.1.1 Older-Worker (Low) Employment 1.1.2 Retirement Decisions 1.2 Focusing on a New Approach Based on Search Models of the Labour Market 1.2.1 The Influence of Retirement Age on Labour Market Flows 1.2.2 The Influence of Labour Market Status on Retirement Age References 2: Horizon Effect and Older Workers ́Employment: An Examination of the French Labour Force Survey 2.1 Introduction 2.2 Empirical Strategy 2.3 A Preliminary Strategy (Strategy I)2.4 Identifying the Horizon Effect (Strategy II) 2.A Empirical Evidence 2.5 Conclusion References 3: The Indirect Impact of Pension Systems on Employment prior to the Minimal Retirement Age: A New Estimation 3.1 The Statistical Model 3.2 Administrative Data on French Pensioners 3.3 Measuring the Impact of Retirement on Employment 3.4 Results 3.5 Conclusion References 4: Are Unemployed Workers More Likely to Retire? 4.1 Introduction 4.2 Descriptive Analysis 4.2.1 Labour Force Status: Elements of Definition 4.2.2 Partly Retired Individuals vs their Searching and Working Counterparts4.2.3 Transition to Retirement 4.3 Econometric Analysis 4.3.1 Probit Models 4.3.2 Propensity Score-Matching Approach Implementation. Results of the matching model. Assessing the matching quality. 4.4 Conclusion 4.A Matching Methodology 4.B Probit Regressions References 5: Reforming the US Social Security System: Accounting for Employment Uncertainty 5.1 Introduction and Motivation 5.2 Stylized Facts Regarding Retirement 5.3 Methodology and the Dynamic Model 5.3.1 The Value Functions 5.3.2 Other Details of the Model5.3.3 Solving and Simulating the Model 5.4 Simulation Results 5.5 Policy Experiments 5.5.1 Claiming Behaviour by Employment Status 5.5.2 Budgetary Consequences of the Policy Experiments 5.6 Conclusions 5.A Social Security Incentives for Early Retirementin the United States 5.A.1 Benefit Calculation 5.A.2 Actuarial Reduction Factor 5.A.3 Earnings Test 5.B Model Calibration References Subject Index Name Index "This volume examines the interaction of labour market conditions and retirement decisions. Based on French and US data, it provides empirical evidence and quantitative analysis of retirement and labor market flows. It studies the horizon effect and uses French individual data and probit models to show that the horizon effect does matter for the probability of being employed before the early retirement age. It analyses the influence of the retirement age on labour-market equilibrium, as well as the impact of labour market conditions, especially the importance of unemployment risk, on retirement decisions.:-- Provided by publisher The work brings together academics, regulators, and industry experts to provide a multifaceted array of research and perspectives on insurance, its role and functioning, and the potential systemic risk it could create Based on US and French data, this volume examines retirement and labor market flows and the probability of being employed before the early retirement age