Another Look at the Identification of Dynamic Discrete Decision Processes: With an Application to Retirement Behavior

Victor Aguirregabiria ()

No 169, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: This paper presents a method to estimate the effects of a counterfactual policy intervention in the context of dynamic structural models where all the structural functions (i.e., preferences, technology, transition probabilities, and the distribution of unobservable variables) are nonparametrically specified. We show that agents' behavior, before and after the policy intervention, and the change in agents' utility are nonparametrically identified. Based on this result we propose a nonparametric procedure to estimate the behavioral and welfare effects of a general class of counterfactual policy interventions. We apply this method to evaluate hypothetical reforms in the rules of a public pension system using a model of retirement behavior and a sample of blue-collar workers in Sweden

Keywords: Dynamic discrete decision processes; Nonparametric identification; Counterfactual policy interventions; Retirement behavior. (search for similar items in EconPapers)
JEL-codes: C14 C25 J26 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ecm and nep-upt
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