Ageing and the Labor Market in Japan

Ageing and the Labor Market in Japan

Problems and Policies

ESRI Studies Series on Ageing

Edited by Koichi Hamada and Hiromi Kato

This book is a concerted attempt by economists to investigate and offer remedies for some of the difficulties associated with an ageing labor market.

Chapter 7: Retirement in Non-Cooperative and Cooperative Families

Erik Hernæs, Zhiyang Jia and Steinar Strøm

Subjects: economics and finance, public sector economics, social policy and sociology, ageing, economics of social policy


* Erik Hernæs, Zhiyang Jia and Steinar Strøm 1. INTRODUCTION An increasing proportion of elderly persons in the population, falling labor force participation of older males and maturing of the public pension system all combine to threaten the financial stability of pay-as-you-go public pension systems in many industrialized countries. In Norway, problems have been exacerbated by the introduction of an early retirement program, hereafter called AFP (a Norwegian abbreviation). From a policy point of view, knowledge about how economic incentives affect workers’ retirement, and to what extent they will respond to policy changes are therefore important. Most of the literature on retirement behavior has focused on single individuals; see Lumsdaine and Mitchell (1999) for references. However, since a majority of older men and women are married or cohabitating, it is important to account for the fact that labor market behavior may be due to joint decisions by married couples. Among the relatively few empirical studies of retirement behavior in a household context, most have focused on patterns of family retirement, like ‘wife first’, ‘joint retirement’ and ‘husband first’; see Henretta and O’Rand (1983) for an early contribution. In recent studies Gustman and Steinmeier (2000) find a tendency for spouses to retire together, which they attribute to correlation in preferences for (joint) retirement. Baker (2002) finds that the propensity to retire among males is around 5–10 percentage points higher when the wife is eligible for a supplementary pension. Blau (1997) finds ‘strong associations between the labor force transition...

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