Spousal and Survivor Benefits in Option Value Models of Retirement: An Application to Belgium

21 Pages Posted: 7 Sep 2016  

Alain Jousten

University of Liege; IZA Institute of Labor Economics; Netspar; International Monetary Fund (IMF)

Mathieu Lefebvre

University of Strasbourg

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2016

Abstract

We study retirement incentives with augmented option value model à la Stock and Wise (1990). We propose methodological extensions to better reflect the respective incentives faced by singles and couples. Our results show that a more comprehensive modelling of couples’ incentives leads to very different patterns of retirement incentives – particularly for women. We apply the new indicators to data from the Survey of Health, Ageing and retirement in Europe (SHARE) in Belgium and find two key results. First, contrary to several previous studies, we obtain a positive signed income effects. Second, we find very different retirement incentives for men and women, with little flexibility in the retirement decision for men and substantially more flexibility for women as a function of financial incentives and household composition.

Keywords: Retirement, social security, dependent benefits

JEL Classification: H55, J21, J26

Suggested Citation

Jousten, Alain and Lefebvre, Mathieu, Spousal and Survivor Benefits in Option Value Models of Retirement: An Application to Belgium (August 31, 2016). Netspar Discussion Paper No. 08/2016-030. Available at SSRN: https://ssrn.com/abstract=2835509 or http://dx.doi.org/10.2139/ssrn.2835509

Alain Jousten (Contact Author)

University of Liege ( email )

Place des Orateurs 3
Batiment B31
4000 Liege
Belgium
+32 4 366 3198 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

Mathieu Lefebvre

University of Strasbourg

Strasbourg, Alsace
France

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