IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/10-163.html
   My bibliography  Save this paper

The Influence of Retiree Health Benefits on Retirement Patterns

Author

Listed:
  • James Marton

    (Georgia State University)

  • Stephen A. Woodbury

    (W.E. Upjohn Institute and Michigan State University)

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.

Suggested Citation

  • James Marton & Stephen A. Woodbury, 2010. "The Influence of Retiree Health Benefits on Retirement Patterns," Upjohn Working Papers 10-163, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:10-163
    as

    Download full text from publisher

    File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1180&context=up_workingpapers
    Download Restriction: This material is copyrighted. Permission is required to reproduce any or all parts.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Christopher J. Ruhm, 1995. "Secular Changes in the Work and Retirement Patterns of Older Men," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 362-385.
    2. David M. Blau & Donna B. Gilleskie, 2001. "Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 64-80, February.
    3. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, vol. 70(2), pages 207-236, November.
    4. Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
    5. David M. Blau & Donna B. Gilleskie, 2006. "Health insurance and retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 935-953, November.
    6. Joshua Congdon-Hohman, 2015. "Love, Toil, And Health Insurance: Why American Husbands Retire When They Do," Contemporary Economic Policy, Western Economic Association International, vol. 33(1), pages 118-140, January.
    7. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843, Elsevier.
    8. James Marton & Stephen A. Woodbury, 2013. "Retiree Health Benefits as Deferred Compensation," Public Finance Review, , vol. 41(1), pages 64-91, January.
    9. Gruber, Jonathan & Madrian, Brigitte C, 1995. "Health-Insurance Availability and the Retirement Decision," American Economic Review, American Economic Association, vol. 85(4), pages 938-948, September.
    10. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
    11. Alan L. Gustman & Thomas L. Steinmeier, 2001. "Retirement and Wealth," NBER Working Papers 8229, National Bureau of Economic Research, Inc.
    12. Erin Strumpf, 2010. "Employer-sponsored health insurance for early retirees: impacts on retirement, health, and health care," International Journal of Health Economics and Management, Springer, vol. 10(2), pages 105-147, June.
    13. Nicole Maestas, 2010. "Expectations and Realizations of Work after Retirement," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
    14. Kathleen McGarry, 2004. "Health and Retirement: Do Changes in Health Affect Retirement Expectations?," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
    15. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    16. David M. Blau & Donna B. Gilleskie, 2008. "The Role Of Retiree Health Insurance In The Employment Behavior Of Older Men," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 475-514, May.
    17. Coile, Courtney C. & Levine, Phillip B., 2007. "Labor market shocks and retirement: Do government programs matter?," Journal of Public Economics, Elsevier, vol. 91(10), pages 1902-1919, November.
    18. Charles Brown, 2006. "The Role of Conventional Retirement Age in Retirement Decisions," Working Papers wp120, University of Michigan, Michigan Retirement Research Center.
    19. Bollinger, Christopher R., 1996. "Bounding mean regressions when a binary regressor is mismeasured," Journal of Econometrics, Elsevier, vol. 73(2), pages 387-399, August.
    20. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    21. Martin Farnham & Purvi Sevak, 2016. "Housing Wealth and Retirement Timing," CESifo Economic Studies, CESifo Group, vol. 62(1), pages 26-46.
    22. Bollinger, Christopher R. & van Hasselt, Martijn, 2017. "A Bayesian analysis of binary misclassification," Economics Letters, Elsevier, vol. 156(C), pages 68-73.
    23. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    24. Joseph F. Quinn & Richard V. Burkhauser & Daniel A. Myers, 1990. "Passing the Torch: The Influence of Economic Incentives on Work and Retirement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number pt, November.
    25. Michael Hurd & Kathleen McGarry, 1993. "The Relationship Between Job Characteristics and Retirement," NBER Working Papers 4558, National Bureau of Economic Research, Inc.
    26. Alan L. Gustman & Thomas L. Steinmeier, 1994. "Employer-Provided Health Insurance and Retirement Behavior," ILR Review, Cornell University, ILR School, vol. 48(1), pages 124-140, October.
    27. Richard V. Burkhauser & Joseph F. Quinn, 1983. "The Effect of Pension Plans on the Pattern of Life Cycle Compensation," NBER Chapters, in: The Measurement of Labor Cost, pages 395-420, National Bureau of Economic Research, Inc.
    28. Christopher R. Bollinger, 2001. "Response Error and the Union Wage Differential," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 60-76, July.
    29. Ruhm, Christopher J, 1990. "Bridge Jobs and Partial Retirement," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 482-501, October.
    30. Kanika Kapur & Jeannette Rogowski, 2007. "The Role of Health Insurance in Joint Retirement among Married Couples," ILR Review, Cornell University, ILR School, vol. 60(3), pages 397-407, April.
    31. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    32. Dhaval Dave & R. Inas Rashad & Jasmina Spasojevic, 2008. "The Effects of Retirement on Physical and Mental Health Outcomes," Southern Economic Journal, John Wiley & Sons, vol. 75(2), pages 497-523, October.
    33. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    34. Courtney Coile & Jonathan Gruber, 2007. "Future Social Security Entitlements and the Retirement Decision," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 234-246, May.
    35. Steffen Huck & Andrew J. Seltzer & Brian Wallace, 2011. "Deferred Compensation in Multiperiod Labor Contracts: An Experimental Test of Lazear's Model," American Economic Review, American Economic Association, vol. 101(2), pages 819-843, April.
    36. Nicole Maestas, 2004. "Back to Work: Expectations and Realizations of Work After Retirement," Working Papers wp085, University of Michigan, Michigan Retirement Research Center.
    37. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.
    38. Nyce, Steven & Schieber, Sylvester J. & Shoven, John B. & Slavov, Sita Nataraj & Wise, David A., 2013. "Does retiree health insurance encourage early retirement?," Journal of Public Economics, Elsevier, vol. 104(C), pages 40-51.
    39. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    40. Bridgitte C. Madrian, 1994. "The Effect of Health Insurance on Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 181-252.
    41. Nicole Maestas, 2004. "Back to Work Expectations and Realizations of Work after Retirement," Working Papers WR-196, RAND Corporation.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Erkmen Giray Aslim, 2019. "The Relationship Between Health Insurance and Early Retirement: Evidence from the Affordable Care Act," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 112-140, January.
    2. Shoven, John B. & Slavov, Sita Nataraj, 2014. "The role of retiree health insurance in the early retirement of public sector employees," Journal of Health Economics, Elsevier, vol. 38(C), pages 99-108.
    3. Mary J. Lopez & Sita Slavov, 2020. "Do immigrants delay retirement and social security claiming?," Applied Economics, Taylor & Francis Journals, vol. 52(10), pages 1105-1123, February.
    4. Joshua Congdon-Hohman, 2018. "Retirement Reversals and Health Insurance," Public Finance Review, , vol. 46(4), pages 583-608, July.
    5. Fitzpatrick, Maria D., 2014. "Retiree health insurance for public school employees: Does it affect retirement?," Journal of Health Economics, Elsevier, vol. 38(C), pages 88-98.
    6. James Marton & Stephen A. Woodbury, 2013. "Retiree Health Benefits as Deferred Compensation," Public Finance Review, , vol. 41(1), pages 64-91, January.
    7. Nyce, Steven & Schieber, Sylvester J. & Shoven, John B. & Slavov, Sita Nataraj & Wise, David A., 2013. "Does retiree health insurance encourage early retirement?," Journal of Public Economics, Elsevier, vol. 104(C), pages 40-51.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Courtney C. Coile, 2015. "Economic Determinants Of Workers’ Retirement Decisions," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 830-853, September.
    2. Erkmen Giray Aslim, 2019. "The Relationship Between Health Insurance and Early Retirement: Evidence from the Affordable Care Act," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 112-140, January.
    3. Helen Levy & Thomas Buchmueller & Sayeh Nikpay, 2015. "The Effect of Health Reform on Retirement," Working Papers wp329, University of Michigan, Michigan Retirement Research Center.
    4. Fitzpatrick, Maria D., 2014. "Retiree health insurance for public school employees: Does it affect retirement?," Journal of Health Economics, Elsevier, vol. 38(C), pages 88-98.
    5. Helen Levy & Thomas Buchmueller & Sayeh Nikpay, 2018. "Is the Affordable Care Act Affecting Retirement Yet?," Working Papers wp393, University of Michigan, Michigan Retirement Research Center.
    6. Shoven, John B. & Slavov, Sita Nataraj, 2014. "The role of retiree health insurance in the early retirement of public sector employees," Journal of Health Economics, Elsevier, vol. 38(C), pages 99-108.
    7. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    8. Eric French & John Bailey Jones, 2011. "The Effects of Health Insurance and Self‐Insurance on Retirement Behavior," Econometrica, Econometric Society, vol. 79(3), pages 693-732, May.
    9. Joshua Congdon-Hohman, 2006. "The Impact of Health Insurance Availability on Retirement Decision Reversals," Working Papers wp137, University of Michigan, Michigan Retirement Research Center.
    10. Bound, John & Stinebrickner, Todd & Waidmann, Timothy, 2010. "Health, economic resources and the work decisions of older men," Journal of Econometrics, Elsevier, vol. 156(1), pages 106-129, May.
    11. Boyle, Melissa A. & Lahey, Joanna N., 2010. "Health insurance and the labor supply decisions of older workers: Evidence from a U.S. Department of Veterans Affairs expansion," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 467-478, August.
    12. Nyce, Steven & Schieber, Sylvester J. & Shoven, John B. & Slavov, Sita Nataraj & Wise, David A., 2013. "Does retiree health insurance encourage early retirement?," Journal of Public Economics, Elsevier, vol. 104(C), pages 40-51.
    13. Joshua Congdon-Hohman, 2018. "Retirement Reversals and Health Insurance," Public Finance Review, , vol. 46(4), pages 583-608, July.
    14. Mary J. Lopez & Sita Slavov, 2020. "Do immigrants delay retirement and social security claiming?," Applied Economics, Taylor & Francis Journals, vol. 52(10), pages 1105-1123, February.
    15. Brown, Kristine M., 2013. "The link between pensions and retirement timing: Lessons from California teachers," Journal of Public Economics, Elsevier, vol. 98(C), pages 1-14.
    16. Jonathan Gruber & Brigitte C. Madrian, 2002. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature," NBER Working Papers 8817, National Bureau of Economic Research, Inc.
    17. Bairoliya, Neha, 2019. "Pension plan heterogeneity and retirement behavior," European Economic Review, Elsevier, vol. 116(C), pages 28-59.
    18. Jody Schimmel, 2006. "Men With Health Insurance and the Women Who Love Them: the Effect of a Husband's Retirement on His Wife's Health Insurance Coverage," Working Papers wp131, University of Michigan, Michigan Retirement Research Center.
    19. Erin Strumpf, 2010. "Employer-sponsored health insurance for early retirees: impacts on retirement, health, and health care," International Journal of Health Economics and Management, Springer, vol. 10(2), pages 105-147, June.
    20. Donna B. Gilleskie & David M. Blau, 2006. "Health insurance and retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 935-953.

    More about this item

    Keywords

    Retirement; Health Insurance; Employee Benefits; Panel Data;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upj:weupjo:10-163. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.