Job Exit Behavior of Older Men

We estimate a dynamic programming model of job exit behavior and retirement using the method of simulated moments. The model and estimation method allow for both unobserved individual effects and unobserved job-specific "match" effects. The model is estimated using two different assumption...

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Bibliographic Details
Published inEconometrica Vol. 59; no. 1; pp. 189 - 210
Main Authors Berkovec, James, Stern, Steven
Format Journal Article
LanguageEnglish
Published Evanston Econometric Society 01.01.1991
George Banta Pub. Co. for the Econometric Society
Blackwell Publishing Ltd
Subjects
Age
Behavior
Comparative studies
Dynamic modeling
Dynamic programming
Econometrics
Economic models
Economic statistics
Economic theory
Economics
Employment
Estimation methods
Expected values
Health hazards
Men
Occupational life
Older people
Part time employment
Retirement
Retirement age
Social security
Static modeling
Statistical analysis
Tenure
Wages
Wages & salaries
United States > US
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Summary:We estimate a dynamic programming model of job exit behavior and retirement using the method of simulated moments. The model and estimation method allow for both unobserved individual effects and unobserved job-specific "match" effects. The model is estimated using two different assumptions about individual discount factors. First, a static model, with the discount factor β equal to zero, is estimated. Then a dynamic model, with β = .95, is estimated. In both models, it is found that bad health, age, and lack of education increase the probability of retirement. The dynamic model performs better than the static model and has different implications for retirement behavior. The job-specific effects are an important source of unobserved heterogeneity.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0012-9682
1468-0262
DOI:10.2307/2938246