Abstract
Private Wealth and Job Exit at Older Age: A Random Effects Model
Highlights
While population ageing puts current pension systems under financial strain, older cohorts accumulate more private wealth than their predecessors until just a couple of decades ago
Our aim is to set up a model framework that allows us to decompose the total effect of private wealth into a causal effect and an effect that is channelled through correlation in time-invariant unobservables
For the retirement exit rate, we find both for net liquid wealth and for net total wealth a positive and significant total effect, but results differ if we look at the decomposition
Summary
While population ageing puts current pension systems under financial strain, older cohorts accumulate more private wealth than their predecessors until just a couple of decades ago. It becomes increasingly important to know whether the private wealth holdings of households influence the flow out of work of elderly workers. Economic models (such as Kingston 2000) assign a positive impact of the level of private wealth holdings on the flow out of work. Bloemen (2011) empirically analyses the impact of the private wealth level of households on the job exit rate of elderly male workers in the Netherlands. The analysis shows that workers with higher levels of net wealth have higher retirement probabilities. Throughout the analysis the maintained assumption is that, after controlling for all the observable regressors, there is no correlation in unobservables between the level of net wealth and the job exit rate
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