HEALTH AND WORK PLACE CONDITIONS IN RETIREMENT MODELS

Rand Corporation, Santa Monica CA

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Abstract

Recent economic research has confirmed the important role of financial incentives in individual retirement decisions. Relatively little attention has been given in this research to non-pecuniary determinants of retirement like health and workplace conditions, however. The primary aim of this project is to incorporate health and workplace conditions in state-of-the-art economic models of retirement in an effort to achieve a broader understanding of the retirement process. An equally important and complementary objective of this project is to develop and analyze readily comparable measures of these non-pecuniary factors in the United States and Europe, taking advantage of recently and soon-to-be-collected cross-nationally comparable data sets. Beyond heightening our understanding of what causes older individuals to retire when they do, this research will address what could be a serious omitted variables problem in existing economic models of retirement. Thus, the significance of the current project lies in a more comprehensive view of the retirement process, made possible by newly collected data in the United States and Europe, as well as in improved estimates of how economic incentives, and hence social pension policies, affect retirement decisions.