The Importance of Economic Expectations for Retirement Entry

Barbara Broadway () and John P. Haisken-DeNew ()
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Barbara Broadway: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, http://melbourneinstitute.com/staff/bhanel/default.html
John P. Haisken-DeNew: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, http://melbourneinstitute.com/staff/jhd/default.html
Authors registered in the RePEc Author Service: John P. de New

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: We estimate hazard rates of retirement entry as a function of the option value of work. The individuals’ expectations about the future economy are incorporated in the option value of work, through which they can impact on the timing of retirement entry. In a scenario where individuals expect a strong upturn, the annual hazard rate of retirement entry (average 8.4%) is reduced by 6.0% or half a percentage point compared to a scenario where they expect a downturn. Had individuals been able to anticipate the Global Financial Crisis, the mere expectation of this downturn would have increased retirement entries by 8.7%.

Keywords: Retirement; expectations; pensions (search for similar items in EconPapers)
JEL-codes: D84 J26 J32 (search for similar items in EconPapers)
Pages: 42pp
Date: 2014-12
New Economics Papers: this item is included in nep-age
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2014n28

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