The Effects of Employment Uncertainty and Wealth Shocks on the Labor Supply and Claiming Behavior of Older American Workers

Hugo Benitez-Silva, J. Ignacio Garcia-Perez () and Sergi Jimenez-Martin
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J. Ignacio Garcia-Perez: Universidad Pablo de Olavide and FEDEA
Authors registered in the RePEc Author Service: J. Ignacio García Pérez ()

No 12-12, Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: Unemployment rates in developed countries have recently reached levels not seen in a generation, and workers of all ages are facing increasing probabilities of losing their jobs and considerable losses in accumulated assets. These events have increased the reliance that most (older) workers have on public social insurance programs, exactly at a time that public finances are suffering from a large drop in contributions. Using administrative and household level data we empirically characterize a Life- Cycle model of retirement and claiming decisions in terms of the employment, wage, health, and mortality uncertainty faced by individuals. We analyze the role of three intertwined factors in the recent evolution of work and retirement benefits claiming behavior in the United States; namely, higher unemployment uncertainty, higher unemployment benefits, and wealth shocks. We find that higher employment uncertainty reduces work and increases early claiming, while higher unemployment benefits mildly reduce work and reduce claiming at early ages. Finally, wealth shocks increase both early claiming and work. When all these factors are combined, the final outcome is a mild decline in labor supply and little variation in early claiming.

JEL-codes: J14 J26 J65 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-age, nep-dem and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.stonybrook.edu/economics/research/papers/2012/NEWUSA-V48.pdf First version, 2012 (application/pdf)

Related works:
Working Paper: The Effects of Employment Uncertainty and Wealth Shocks on the Labor Supply and Claiming Behavior of Older American Workers (2015)
Working Paper: The Effects of Employment Uncertainty and Wealth Shocks on the Labor Supply and Claiming Behavior of Older American Workers (2012)
Working Paper: The Effects of Employment Uncertainty and Wealth Shocks on the Labor Supply and Claiming Behavior of Older American Workers (2011)
Working Paper: The effects of employment uncertainty and wealth shocks on the labor supply and claiming behavior of older American workers (2011)
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