Lassoing the Determinants of Retirement

Malene Kallestrup-Lamb, Anders Kock and Johannes Tang Kristensen

Econometric Reviews, 2016, vol. 35, issue 8-10, 1522-1561

Abstract: This article uses Danish register data to explain the retirement decision of workers in 1990 and 1998. Many variables might be conjectured to influence this decision such as demographic, socioeconomic, financial, and health related variables as well as all the same factors for the spouse in case the individual is married. In total, we have access to 399 individual specific variables that all could potentially impact the retirement decision. We use variants of the least absolute shrinkage and selection operator (Lasso) and the adaptive Lasso applied to logistic regression in order to uncover determinants of the retirement decision. To the best of our knowledge, this is the first application of these estimators in microeconometrics to a problem of this type and scale. Furthermore, we investigate whether the factors influencing the retirement decision are stable over time, gender, and marital status. It is found that this is the case for core variables such as age, income, wealth, and general health. We also point out the most important differences between these groups and explain why these might be present.

Date: 2016
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Working Paper: Lassoing the Determinants of Retirement (2013)
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DOI: 10.1080/07474938.2015.1092803

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