Spousal and Survivor Benefits in Option Value Models of Retirement: An Application to Belgium
21 Pages Posted: 7 Sep 2016
Date Written: August 31, 2016
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: Suggested Citation