Social Security, Pensions, and the Retirement Decisions of Individuals and Couples

This thesis presents three empirical studies of Social Security, private pensions, and retirement decisions. Chapter 2 is a study of the retirement decisions of women and couples. Motivated by the fact that the typical household is a dual-worker family, this chapter addresses three issues. The first is the effect of retirement incentives from Social Security and pensions on women's retirement behavior. The second is the spillover effects of incentives on the retirement behavior of spouses. The third is the joint retirement decision-making of couples. Using the Health and Retirement Study (HRS), the retirement incentives from Social Security and pensions are calculated and reduced form models of the impact of each spouse's incentives on their own and spouse's retirement decisions are estimated, as well as two-stage models using incentives as instruments for retirement behavior. The principal findings are that women are as responsive to their own retirement incentives as men and that women's incentives have large spillover effects on men's behavior, while men's incentives do not. The latter result is attributed to asymmetric complementarities of leisure. Chapter 3, joint with Jonathan Gruber, examines the retirement decisions of men. This chapter also uses the HRS to compute retirement incentives and aims to overcome a lack of attention in previous work to dynamic incentives, to the separate effect of Social Security and pensions, to the identification of retirement impacts, and to data deficiencies. Forward-looking incentive measures are found to be more important in explaining behavior and policy simulations suggest that incentive effects may be large. Chapter 4, joint with Peter Diamond, Jonathan Gruber, and Alain Jousten, examines Social Security benefit claiming behavior. The key findings are that delays are optimal in a wide variety of cases, that a non-trivial share of early retirees delays at least one year, and that delays are consistent with cross-sectional predictions.

Economics, Labor (0510)

5003

Copies available exclusively from MIT Libraries, Rm. 14-0551, Cambridge, MA 02139-4307. Ph. 617-253-5668; Fax 617-253-1690. Database ID: DAI-A 61/01, p. 296, Jul 2000