GENDER DIFFERENCES IN THE RETIREMENT BEHAVIOUR OF THE ELDERLY USING NON-LINEAR DECOMPOSITION METHODS

Abstract

Purpose- This paper examines factors of the gender disparity among British people on their retirement decisions using nonlinear decomposition methods and which factors cause gender differentials in retirement decisions between 1991 and 2013. In this respect, both the British Household Panel Survey and Understanding Society are utilised.

Methodology- Both Fairlie (1999) and Yun (2004) methods are used to examine the impacts of observed demographic and income factors on gender differentials of retirement decisions.

Findings- Age, hourly earnings, non-labour income and pension eligibility increase the gender gap, whereas education, good health conditions and being a homeowner act to reduce the gender gap.

Conclusion- Even though the labour force participation of older women has consistently been increasing over the past two decades, the gender disparity influenced by demographic and financial factors has not been significantly reduced over time. The demographic and financial factors mostly explained the gender gap; however, their effects significantly change due to the explained and unexplained parts during the 20-year period.

Keywords

• Oaxaca decomposition,nonlinear models,binary choice,retirement,UK

References

1. Bauer, T. and Sinning, M. (2008). An extension of the Blinder–Oaxaca decomposition to nonlinear models. AStA Advances in Statistical Analysis, 92(2), 197–206.
2. Bazen, S., Joutard, X. and Magdalou, B. (2016). An Oaxaca decomposition for nonlinear models. IZA Discussion Paper No. 9909, Bonn: Institute for the Study of Labour.
3. Blinder, A.S. (1973). Wage discrimination: reduced form and structural estimates. The Journal of Human Resources, 8(4), 436-455.
4. Bowblis, J. R., and Yun, M.S. (2010). Racial and ethnic disparities in the use of drug therapy. Social Science Research, 39, 674–684.
5. Chiu, Chuang-Yi and Chen, J. (2013). Determinants of labour force participation of older married men in Taiwan. Economics Bulletin, 33(4), 3088-3101.
6. DWP (2015). Employment statistics for workers aged 50 and over, by 5-year age bands and gender: from 1984 to 2015. London: Department of Work and Pensions. Retrieved from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/473821/employment-stats-workers-aged-50-and-over-1984-2015.pdf.
7. Fairlie, R. W. (1999). The absence of the African-American owned business: An analysis of the dynamics of self-employment. Journal of Labour Economics, 17(1), 80-108.
8. Fairlie, R.W. (2005). An extension of the Blinder–Oaxaca decomposition technique to logit and probit models. Journal of Economic and Social Measurement, 30(4), 305-316.

9. Fairlie, R.W. and Robb, A.M. (2007). Why are black-owned businesses less successful than white-owned businesses: the role of families, inheritances, and business human capital. Journal of Labour Economics, 25(2), 289-323.
10. Fairlie, R. W. (2015). Addressing path dependence and incorporating sample weights in the nonlinear Blinder–Oaxaca decomposition technique for logit, probit and other nonlinear models. Retrieved from: www. people.ucsc.edu/~rfairlie /papers /decomprevisted_v5.docx.
11. Fortin, N., Lemieux, T. and Firpo, S. (2011). Decomposition methods in Economics. in Ashenfelter, O. and Card, D. (eds.), Handbook of Labour Economics, vol. 4A. Amsterdam: Elsevier, 1–102.
12. Gangl, M. and Ziefle, A. (2009). Motherhood, labour force behaviour, and women’s careers: An empirical assessment of the wage penalty for motherhood in Britain, Germany, and the United States. Demography, 46(2), 341-369.
13. Garcia-Gomez P., Jones, A. M. and Rice, N. (2010). Health effects on labour market exits and entries. Labour Economics, 17(1), 62-76.
14. Gunalp B., Cilasun S. M. and Acar E. O. (2015). Male-female labour market participation and the extent of gender-based wage discrimination in Turkey. Economics Discussion Papers No. 2015-56, Kiel: Kiel Institute for the World Economy.
15. Hernandez-Quevedo C., Jones A. M. and Rice N. (2005). Reporting bias and heterogeneity in self-assessed health: evidence from the British household panel survey. Health, Econometrics and Data Group (HEDG) Working Paper No. 05/04, York: University of York.
16. Jann, B. (2008). The Blinder–Oaxaca decomposition for linear regression models. The Stata Journal, 8(4), 453-479.
17. Jones, A.M. and Wildman, J. (2008). Health, income, and relative deprivation: evidence from the BHPS. Journal of Health Economics, 27(2), 308-324.
18. Kalb, G., Le T. and Leung F. (2012). Decomposing differences in labour force status between indigenous and non-indigenous Australians. IZA Discussion Paper No. 6808, Bonn: The Institute for the Study of Labour.
19. Kunze, A. (2017). The gender wage gap in developed countries. IZA Discussion Paper No. 10826, Bonn: Institute for the Study of Labour.
20. Lynn, P. (ed.) (2006). Quality profile: British Household Panel Survey version 2.0: Waves 1 to 13: 1991–2003. Colchester: Institute for Social and Economic Research, University of Essex. Retrieved from: http://www.iser.essex.ac.uk/files/bhps/qualityprofiles/BHPS-QP-01-03-06-v2.pdf.
21. Lynn, P. (2009). Sample design for Understanding Society. Understanding Society Working Paper No. 2009-01, Essex: Institute for Social and Economics Research.
22. Nielsen, H. S. (1998). Discrimination and detailed decomposition in a logit model. Economics Letters, 61, 115–120.
23. Oaxaca, R.L. (1973). Male-female wage differentials in urban labour markets. International Economic Review, 14(3), 693-709.
24. Oaxaca, R.L. and Ransom, M. (1994). On discrimination and the decomposition of wage differentials. Journal of Econometrics, 61(1), 5-21.
25. Powers, Da. and Pullum, G. (2006). Multivariate decomposition for nonlinear models, Paper presented at PPA conference, NJ: Princeton University.
26. Powers, D.A., Yoshioka, H. and Yun, M.S. (2011). Mvdcmp: multivariate decomposition for nonlinear response models. Stata Journal, 11(4), 556-576.
27. Pritchett, J. B., and Yun, M. S. (2009). The in-hospital mortality rates of slaves and freemen: Evidence from Touro Infirmary, New Orleans, Louisiana, 1855–1860. Explorations in Economic History, 46, 241–252.
28. Rice, N., Roberts, J. and Jones, A.M. (2007). Sick of work or too sick to work? evidence on health shocks and early retirement from the BHPS. SERP Working Papers No. 2007/002, Sheffield: University of Sheffield.
29. Yun, M. S. (2000). Decomposition analysis for a binary choice model. IZA Discussion Paper Series No. 145, Bonn: The Institute for the Study of Labour.
30. Yun, M.S. (2004). Decomposing differences in the first moment. Economic Letters, 82(2), 275–280.
31. Yun, M.S. (2005). Decomposing tests when decomposing differences in the first moment. Journal of Economic and Social Measurement, 30(4), 295-304.
32. Wagstaff, A. and Nguyen, N. N. (2002). Poverty and survival prospects of Vietnamese children under Doi Moi. World Bank Policy Research Working Paper No 2832, Washington DC: World Bank.