http://repub.eur.nl/res/concept/jel-J26/ Recent publications classified by JEL Code J26 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/37161/ 2012-08-01T00:00:00Z Deciding how much to save for retirement is a difficult task that includes many uncertainties. In this paper, we use data from a representative Dutch household panel to study the impact of uncertainty regarding one's savings adequacy on retirement savings contributions and information search processes. We combine ideas from the literature in psychology and economics that provide opposing predictions regarding the impact of uncertainty on retirement savings contributions. Our results indicate that the effect of uncertainty is moderated by two factors: an individual's perceived adequacy of current savings and that individual's financial constraints. In particular, we find that uncertainty increases retirement contributions for those who believe that they save adequately; however, it hinders retirement contributions for those who believe that they save inadequately. This effect of uncertainty is further moderated by the availability of financial means: a reduction in uncertainty results in greater contributions to savings only when financial constraints are absent. We also find that uncertainty has both indirect and direct effects on savings information search. In particular, uncertainty indirectly affects savings information search because it impacts individuals' intentions to save, which consequently forces individuals to engage in purchase-oriented information search; however, uncertainty also has a direct effect because individuals engage in ongoing information search processes to directly reduce uncertainty. The implications of these findings are discussed. Schie, R.J.G. van Donkers, A.C.D. Dellaert, B.G.C. http://repub.eur.nl/res/pub/26527/ 2011-10-01T00:00:00Z Ill-health can be expected to reduce employment and income. But are the effects sustained over time? Do they differ across the income distribution? And are there spillover effects on the employment and income of the spouse? We use matching combined with difference-in-differences to identify the causal effects of sudden illness, represented by acute hospitalisations, on employment and income up to six years after the health shock using linked Dutch hospital and tax register data. On average, an acute hospital admission lowers the employment probability by seven percentage points and results in a 5% loss of personal income (30% for those entering disability insurance) two years after the shock. There is no subsequent recovery in either employment or income. The distribution of ill-health contributes to income inequality: a health shock is both more likely to occur and to have a larger relative impact on employment and income at the bottom of the income distr ibution. There are large spillover effects: household income falls by 50% more than the income of the disabled person, and the employment probability of the spouse is reduced by 1.5 percentage points. The negative spousal employment effect is larger for male than for female spouses and in higher income households. García-Gómez, P. Kippersluis, J.L.W. van O'Donnell, O.A. Doorslaer, E.K.A. van http://repub.eur.nl/res/pub/22553/ 2011-02-04T00:00:00Z This paper explores the interaction between retirement flexibility and portfolio choice in an overlapping-generations model of a closed economy. Retirement flexibility is often seen as a hedge against capital market risks which justifies more risky asset portfolios. We show, however, that this positive relationship between risk taking and retirement flexibility is weakened - and under some conditions even turned around - if not only capital market risks but also productivity risks are considered. Productivity risk in combination with a high elasticity of substitution between consumption and leisure creates a positive correlation between asset returns and labour income, reducing the willingness of consumers to bear risk. Moreover, it turns out that general equilibrium effects can either increase or decrease the equity exposure, depending on the degree of substitutability between consumption and leisure. Adema, Y. Bonenkamp, J. Meijdam, L. http://repub.eur.nl/res/pub/19581/ 2010-01-01T00:00:00Z The recently developed genome-wide association study (GWAS) design enables the identification of genes specifically associated with economic outcomes such as occupational and other choices. This is a promising new approach for economics research which we aim to apply to the choice for entrepreneurship. However, due to multiple testing issues, very large sample sizes are needed to differentiate between true and false positives. For a GWAS on entrepreneurship, we expect that a sample size of at least 30,000 observations is required. Koellinger, Ph.D. Loos, M.J.H.M. van der Groenen, P.J.F. Thurik, A.R. Rivadeneira Ramirez, F. Rooij, F.J.A. van http://repub.eur.nl/res/pub/14046/ 2008-10-02T00:00:00Z We estimate the impact of health and financial incentives on the retirement transitions of older workers in Spain. Individual measures of pension wealth, peak and accrual values are constructed using labor market histories and health shocks are derived as changes in a composite health stock measure over time. We examine labour market exits into both old age retirement and a broader definition of retirement including inactivity, while controlling for unobserved heterogeneity. We find that pension wealth, accrual and peak value are significant determinants of retirement decisions, although their effect is weaker in the case of the broad definition of retirement. Initial health stock shows a significant impact on both definitions of retirement. Only large negative health shocks have a significant effect on the probability of entering the broader definition of retirement. Unlike previous literature, we find that (i) financial incentives, when measured adequately, exert a greater impact on retirement behaviour than health shocks, and (ii) initial health stock plays a more important role than health shocks in determining retirement decisions. We also perform simulations of a recently enacted reform of pension incentives and show how its expected effects compare to those of health improvements. Erdogan-Ciftci, E. Doorslaer, E.K.A. van Lopez-Nicolas, A. http://repub.eur.nl/res/pub/7670/ 2006-04-03T00:00:00Z This study explored the psychological mechanisms that underlie the retirement planning and saving tendencies of Dutch and American workers. Participants were 988 Dutch and 429 Americans, 25-64 years of age. Analyses were designed to: (a) examine the extent to which structural variables were related to planning tendencies, and (b) develop culture-specific path analysis models to identify the mechanisms that underlie perceived financial preparedness for retirement. Findings revealed striking differences across the Netherlands and the United States not only among structural variables predictive of key psychological and retirement planning constructs, but also in the robustness of the path models. These findings suggest that policy analysts should take into account both individual and cultural differences in the psychological predispositions of workers when considering pension reforms that stress individual responsibility for planning and saving. Hershey, D.A. Henkens, K. Dalen, H.P. van http://repub.eur.nl/res/pub/6697/ 2003-11-01T00:00:00Z This paper focuses on the relation between worker's productivity and retirement decision. Assuming that productivity follows geometric Brownian motion with drift, there exists such a level of productivity for which it is optimal to retire. The worker buys an insurance, which gives a constant income and retirement benefits in exchange for the total output. The level of income and benefits is set to maximize lifetime utility. In such framework we find the retirement threshold of productivity and the probability of retirement. Kula, G.J. http://repub.eur.nl/res/pub/6820/ 2002-03-21T00:00:00Z In the Netherlands a transition takes place from early retirement schemes, which are characterized by high implicit tax rates to schemes that have a higher degree of actuarial fairness. in this paper we look at the impact of this change at the labor participation rates of 55 to 65 years old persons. The analysis has been applied on repeated choices on the basis of stated preferences. We estimate a mixed (or random parameters) logit model. The most important finding is the independent role that is played by the number of years for which has built up pension claims. Its impact does not only run via the discounted value of future pension streams. The results indicate that the change in the early retirement schemes will considerably increase labor participation. A participation rate of 50% for the age group under consideration is within reach. Nelissen, J.H.M. http://repub.eur.nl/res/pub/7717/ 1999-08-05T00:00:00Z This paper investigates the relation between human capital and retirement when the age of retirement is endogenous. This relation is examined in a life-cycle earnings model. An employee works full time until retirement. The worker accumulates human capital by training- on-the-job and by learning-by-doing. The human capital of an employee is subject to depreciation when knowledge of technologies becomes obsolete. After a shock in technology, the worker depreciates on his human capital. The lower human capital results in a lower life-time income, but also in a lower price of an earlier retirement. Alders, P.