Should We Retire Earlier in Order to Look after Our Parents? The Role of Immigrants

Posted: 28 Feb 2012

See all articles by Mariacristina Rossi

Mariacristina Rossi

University of Turin, Esomas

Agnese Romiti

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Date Written: November 1, 2011

Abstract

This paper aims to detect whether or not people could work for more years in the presence of a more flourishing and cheaper formal care market, which, in turn, would provide support for people who are still at work and who have to cope with the care of their elderly parents and relatives. We focus on the flow of immigrants as a key variable in order to detect whether or not this channel is at work. We disentangle retirement decisions, first by modelling retirement choice using a simple life-cycle framework in which caring for parents is introduced into the choice set. We then correlate retirement choice with the gap between the foregone salary if early retirement is chosen and the price of formal care. The findings show that immigrants contribute to the postponement of retirement for women only.

According to our estimates, we predict that the increase in immigration rate (equal to 4 percentage points) which occurred over the period 2000-2008 raised the retirement age for Italian women (with parents who are still alive) by almost one year, while the impact on men was non-existent.

Keywords: retirement decisions, life cycle, option value, international migration, long-term care

JEL Classification: J22, J26, F22

Suggested Citation

Rossi, Mariacristina and Romiti, Agnese, Should We Retire Earlier in Order to Look after Our Parents? The Role of Immigrants (November 1, 2011). Netspar Discussion Paper No. 11/2011-114. Available at SSRN: https://ssrn.com/abstract=2012358 or http://dx.doi.org/10.2139/ssrn.2012358

Mariacristina Rossi (Contact Author)

University of Turin, Esomas ( email )

Corso Unione Sovietica
Torino, Torino 10100
Italy

Agnese Romiti

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

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