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New Tools in Micromodeling Retirement Decisions: Overview and Applications to the Italian Case

Author

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  • Luca Spataro

    (Department of Economics, University of Pisa)

Abstract
The aging process and the reduction of labor-force participation are matters of much concern in most developed countries, especially for their implication on the sustainability of Social Security systems and for tackling poverty, just to mention few topics. For this reasons the literature on retirement has developed dramatically in the last decades and, thanks to improved computer power and to data availability, the estimation techniques are getting realistic and the fields of application are constantly increasing. In this paper I present an overview of the most recent developments in micromodeling retirement decisions and discuss the main advantages and disadvantages of each approach; in particular, I put an emphasis on the trade-off between the degree of realism of hypotheses,on the one hand, and data tractability and/or estimation performance, on the other hand, affecting the choice of the estimation strategy. I also sketch some of the most relevant topics which deserve more attention in future research. As an example, in the remainder of the article I focus on the Italian case: after presenting some stylized facts and the main results of the applied works assessing the effects of Social Security on agents’ choices, I carry out a comparison between two alternative “dynamic” estimation approaches (Duration model and Option Value model) and discuss their main implications.In particular, as for the Duration model, I propose several new measures of the wealth accumulation opportunities provided by the Social Security system and assess their role played in determining the timing of retirement of Italian older male employees.

Suggested Citation

  • Luca Spataro, 2002. "New Tools in Micromodeling Retirement Decisions: Overview and Applications to the Italian Case," CeRP Working Papers 28, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    • Handle: RePEc:crp:wpaper:28
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    References listed on IDEAS

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    2. Arnds, Pascal & Bonin, Holger, 2002. "Frühverrentung in Deutschland: Ökonomische Anreize und institutionelle Strukturen," IZA Discussion Papers 666, Institute of Labor Economics (IZA).
    3. Deschryvere, Matthias, 2004. "Health and Retirement. An Update of the Literature," Discussion Papers 932, The Research Institute of the Finnish Economy.
    4. Brown, Alessio J.G. & Fraikin, Anne-Lore, 2022. "The old-age pension household replacement rate in Belgium," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    5. Marjan, MAES, 2008. "Financial and redistributive impact of reforming the old-age pension system in Belgium," Discussion Papers (ECON - Département des Sciences Economiques) 2008040, Université catholique de Louvain, Département des Sciences Economiques.
    6. Marjan, MAES, 2008. "Does the dismantlement of early retirement schemes increase unemployment in Belgium ?," Discussion Papers (ECON - Département des Sciences Economiques) 2008041, Université catholique de Louvain, Département des Sciences Economiques.
    7. Luca Spataro, 2003. "Social Security And Retirement Decisions In Italy," Discussion Papers 2003/1, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Hakola, Tuulia, 2002. "Alternative Approaches to Model Withdrawals from the Labour Market – A Literature Review," Working Paper Series 2003:4, Uppsala University, Department of Economics.
    9. Fabio Pammolli & Nicola Carmine Salerno, 2004. "Regole pensionistiche e prolungamento dell'attività: analisi del TIR e effetti del cumulo lavoro-pensione," Working Papers CERM 07-2004, Competitività, Regole, Mercati (CERM).

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    More about this item

    Keywords

    Retirement; simulation models;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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