How to Evaluate the Effects of Social Security Policies on Retirement and Saving When Firm Policies Affect the Opportunities Facing Older Individuals

41 Pages Posted: 13 Feb 2008

See all articles by Alan L. Gustman

Alan L. Gustman

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography

Date Written: June 1, 2004

Abstract

This project uses data from the Health and Retirement Study to examine, in the context of a structural retirement model, the effects on retirement of non-wage aspects of employment emanating from firm side factors. Factors examined include minimum hours constraints, layoffs, physical and mental requirements of the job, informal pressures to retire, accommodations made by the employer when a person has a health problem, and retirement windows. The most important effects found pertain to minimum hours constraints. Should minimum hours constraints be abolished, the percent of the population ages 62 to 69 who are completely retired will decline by 10 to 15 percentage points. The fraction in this age group who are working in partial retirement jobs will increase by roughly twenty percentage points of the population. Were minimum hours constraints abolished, more than twice as many people would enter partial retirement as would leave full time work. As a result, total FTE employment would increase were minimum hours constraints eliminated. Increasing the importance of partial retirement would affect the role of the earnings test and liquidity of the Social Security system, although the increase in partial retirement would be largely, but not entirely offset by the decline in full time work. This would limit the size of any effects on Social Security finances.

Suggested Citation

Gustman, Alan L. and Steinmeier, Thomas L., How to Evaluate the Effects of Social Security Policies on Retirement and Saving When Firm Policies Affect the Opportunities Facing Older Individuals (June 1, 2004). Michigan Retirement Research Center Research Paper No. WP 2004-078, Available at SSRN: https://ssrn.com/abstract=1092908 or http://dx.doi.org/10.2139/ssrn.1092908

Alan L. Gustman (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography ( email )

Lubbock, TX 79409-2101
United States
806-742-2201 (Phone)

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