Abstract
The research of retirement decisions focus on the trade-off between the retirement
wealth and the planned retirement span. Using 8 waves of the Household, Income
and Labour Dynamics in Australia (HILDA) Survey in a continuous time model,
we estimate the Frisch elasticity and the relative risk aversion. The retirement
decision elasticities (0.21 to 0.25) is low compared to the elasticity of the
intertemporal labour supply on the extensive margin. When compared to the
theoretical solution using the same model setting the constant relative risk
aversion estimate is high (2.2 to 2.3). The finding indicates a low responsiveness
to retirement pension benefits. The graph of age profile and a set of regressions
show a strong motive on smoothing consumption during the pre-retirement
period. This snapshot provides new evidence to explain the impact of financial
incentives in the Australian pension system that induces earlier retirement.
References
- Blundell, R., Macurdy, T., 1999. Labor supply: A review of alternative approaches. In:Elsevier, pp. 1559-1695.
- Chetty, R., 2009. Bounds on Elasticities with Optimization Frictions: A Synthesis of
- Micro and Macro Evidence on Labor Supply. National Bureau of Economic Research Working Paper Series No. 15616
- Coile, C., Gruber, J., 2002. Social Security And Retirement. Center for Retirement
- Research at Boston College Dandie, S., Mercante, J., 2007. Australıan Labour Supply Elastıcıtıes: Comparıson And Crıtıcal Revıew. Australian Treasury
- Farhi, E., Panageas, S., 2007. Saving and investing for early retirement: A theoretical analysis. Journal of Financial Economics 83, 87-121
- Jerry, A.H., David, A.W., 1985. Social Security, Health Status, and Retirement.
- In:National Bureau of Economic Research, Inc, pp. 159-192. Kingston, G.H., 2000. Efficient Timing of Retirement. Review of Economic Dynamics 3, 840
- Manoli , D., Weber, A., 2010. Intertemporal Substitution in Labor Force
- Participation:Evidence from Policy Discontinuities. UCLA Mitchell, O.S., Fields, G.S., 1983. Rewards to Continued Work: The Economic
- Incentives For Postponing Retirement. National Bureau of Economic Research Working Paper Series No. 1204
- Stock, J.H., Wise, D.A., 1990. Pensions, the Option Value of Work, and Retirement. Econometrica 58, 1151-1180
- Warren, D., Oguzoglu, U., 2007. Retirement in Australia: A Closer Look at the Financial
Abstract
References
- Blundell, R., Macurdy, T., 1999. Labor supply: A review of alternative approaches. In:Elsevier, pp. 1559-1695.
- Chetty, R., 2009. Bounds on Elasticities with Optimization Frictions: A Synthesis of
- Micro and Macro Evidence on Labor Supply. National Bureau of Economic Research Working Paper Series No. 15616
- Coile, C., Gruber, J., 2002. Social Security And Retirement. Center for Retirement
- Research at Boston College Dandie, S., Mercante, J., 2007. Australıan Labour Supply Elastıcıtıes: Comparıson And Crıtıcal Revıew. Australian Treasury
- Farhi, E., Panageas, S., 2007. Saving and investing for early retirement: A theoretical analysis. Journal of Financial Economics 83, 87-121
- Jerry, A.H., David, A.W., 1985. Social Security, Health Status, and Retirement.
- In:National Bureau of Economic Research, Inc, pp. 159-192. Kingston, G.H., 2000. Efficient Timing of Retirement. Review of Economic Dynamics 3, 840
- Manoli , D., Weber, A., 2010. Intertemporal Substitution in Labor Force
- Participation:Evidence from Policy Discontinuities. UCLA Mitchell, O.S., Fields, G.S., 1983. Rewards to Continued Work: The Economic
- Incentives For Postponing Retirement. National Bureau of Economic Research Working Paper Series No. 1204
- Stock, J.H., Wise, D.A., 1990. Pensions, the Option Value of Work, and Retirement. Econometrica 58, 1151-1180
- Warren, D., Oguzoglu, U., 2007. Retirement in Australia: A Closer Look at the Financial
Details
| Other ID | JA59AG82VP |
|---|---|
| Journal Section | Articles |
| Authors | |
| Publication Date | June 1, 2011 |
| Published in Issue | Year 2011 Volume: 3 Issue: 1 |