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The effect of social security, health, demography and technology on retirement
journal contribution
posted on 2023-06-10, 05:03 authored by Pedro Cavalcanti Ferreira, Marcelo Rodrigues dos SantosThis article studies the determinants of the labor force participation of the elderly and investigates the factors that may account for the increase in retirement in the second half of the last century. We develop a lifecycle general equilibrium model with endogenous retirement that embeds Social Security legislation and Medicare. Individuals are ex ante heterogeneous with respect to their preferences for leisure and face uncertainty about labor productivity, health status and out-of-pocket medical expenses. The model is calibrated to the U.S. economy in 2000 and is able to reproduce very closely the retirement behavior of the American population. It reproduces the peaks in the distribution of Social Security applications at ages 62 and 65 and the observed facts that low earners and unhealthy individuals retire earlier. It also matches very closely the increase in retirement from 1950 to 2000. Changes in Social Security policy – which became much more generous – and the introduction of Medicare account for most of the expansion of retirement. In contrast, the isolated impact of the increase in longevity was a delaying of retirement.
History
Publication status
- Published
Journal
Review of Economic DynamicsISSN
1094-2025Publisher
Elsevier BVExternal DOI
Issue
2Volume
16Page range
350-370Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2022-10-10Usage metrics
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