The Influence of Retiree Health Benefits on Retirement Patterns

Upjohn Institute Working Paper 10-163

49 Pages Posted: 3 Mar 2010

See all articles by James Marton

James Marton

Georgia State University - Andrew Young School - Department of Economics

Stephen Woodbury

Michigan State University; W.E. Upjohn Institute for Employment Research

Date Written: February 25, 2010

Abstract

We estimate the effect of employer offers of retiree health benefits (RHBs) on the timing of retirement using a sample of Health and Retirement Study (HRS) men observed over a period of up to 12 years. We hypothesize that the effect of RHBs differs for workers of different ages — a hypothesis we can test now that the main HRS cohort has aged sufficiently. We apply three wellknown panel data estimators and find that, for men in their 50s, RHBs have little or no effect on retirement decisions; however, a substantial effect emerges for men in their early 60s. We use simulations to illustrate how RHBs alter retirement patterns.

This paper is substantially revised from “Retiree Health Benefits and the Decision to Retire,” W.J. Usery Workplace Research Group Paper Series 2009-5-1 and W. E. Upjohn Institute Staff Working Paper 09-149, March 2009.

Keywords: Retirement, Health Insurance, Employee Benefits, Panel Data

JEL Classification: J26, I18, J32

Suggested Citation

Marton, James and Woodbury, Stephen, The Influence of Retiree Health Benefits on Retirement Patterns (February 25, 2010). Upjohn Institute Working Paper 10-163. Available at SSRN: https://ssrn.com/abstract=1562654 or http://dx.doi.org/10.2139/ssrn.1562654

James Marton

Georgia State University - Andrew Young School - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Stephen Woodbury (Contact Author)

Michigan State University ( email )

East Lansing, MI 48824
United States
517-355-4587 (Phone)
517-432-1068 (Fax)

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States
269-343-5541 (Phone)

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