Understanding Earnings, Labor Supply, and Retirement Decisions

Xiaodong Fan (), Ananth Seshadri and Christopher Taber
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Ananth Seshadri: University of Wisconsin-Madison
Christopher Taber: University of Wisconsin-Madison

Working Papers from University of Michigan, Michigan Retirement Research Center

Abstract: We develop and estimate a model in which individuals make decisions on consumption, human capital investment, labor supply, and retirement. Unlike all previous work, our model allows both an endogenous wage process (which is typically assumed exogenous in the human capital and earnings dynamics literature). In addition, we introduce health shocks. We estimate the model and match the life-cycle profiles of wages, hours and retirement from SIPP data. We analyze the impact of health shocks on retirement, as well as the effect of changes in payroll taxes and increases in the Normal Retirement Age on labor force participation of older Americans.

Pages: 42 pages
Date: 2017-09
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-ltv and nep-pbe
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Citations: View citations in EconPapers (6)

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