Wealth Shocks and Retirement Timing and Other Essays

This dissertation contains essays on two groups of individuals whose economic well being and behavior have received considerable attention in recent years: retirees and single mothers at risk of welfare receipt. Chapter 1 “Wealth Shocks and Retirement Timing: Evidence from the Nineties,” uses the 1992 to 1998 waves of the Health and Retirement Study (HRS) to find that exogenous increases in wealth lead to earlier retirement. Panel data on wealth and saving are used to estimate an elasticity of retirement flows between 1996 and 1998 with respect to wealth of 0.39 and 0.50 for men. Difference-in-differences regressions of retirement rates of individuals whose pension wealth depends on the stock market—individuals with defined contribution (DC) plans, to those whose pension wealth is not directly affected by the market—individuals with defined benefit (DB) pension plans, are also estimated. Consistent with wealth effects, significant increases in retirement rates are found among workers with DC plans. Chapter 2, “Local Fiscal Policy And Retiree Migration,” uses the 1992 to 2000 waves of HRS and town-level fiscal data from the Census of Governments, to examine whether moves by households near retirement age are motivated by local fiscal policy. The data show some evidence that movers lower their fiscal burden. Households that move across states the first time after their children have reached adulthood reduce their property tax liability by an average of $115. However, there is a great deal of heterogeneity across different types of movers. It is clear that while fiscal policy may factor into the move decision, it is just one of many variables upon which location choice by retirees is based. Chapter 3, “AFDC, SSI, And Welfare Reform Aggressiveness: Caseload Reductions Vs. Caseload Shifting,” uses pooled cross-sectional data from the 1986 to 1996 Current Population Survey (CPS) to examine whether reforms to the AFDC program that have made receipt of cash benefits more difficult for single mothers affected caseloads of the SSI program. Variation in state welfare reform over time shows that female-headed households in states pursuing welfare reform were 21.6 percent more likely to receive SSI.

Wealth (D914100)

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