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Working Paper
Health, Health Insurance, and Retirement: A Survey
The degree to which retirement decisions are driven by health is a key concern for both academics and policymakers. In this paper we survey the economic literature on the health-retirement link in developed countries. We describe the mechanisms through which health affects labor supply and discuss how they interact with public pensions and public health insurance. The historical evidence suggests that health is not the primary source of variation in retirement across countries and over time. Furthermore, declining health with age can only explain a small share of the decline in employment ...
Journal Article
The Lifetime Medical Spending of Retirees
Using dynamic models of health, mortality, and out-of-pocket medical spending (both inclusive and net of Medicaid payments), we estimate the distribution of lifetime medical spending that retired US households face over the remainder of their lives. We find that households who turned 70 in 1992 will, on average, incur $122,000 in medical spending, including Medicaid payments, over their remaining lives. At the top tail, 5 percent of households will incur more than $300,000 and 1 percent of households will incur over $600,000 in medical spending inclusive of Medicaid. The level and the ...
Newsletter
How do sudden large losses in wealth affect labor force participation?
The authors assess whether the sudden large losses in household wealth due to recent declines in stock and home values have significantly affected the U.S. labor market. They find that the overall labor force participation rate would be 0.7 percentage points lower were it not for the declines in the values of stocks and houses over the 2006?10 period.
Working Paper
The effect of part-time work on wages: evidence from the Social Security rules
This paper presents estimates of the part-time wage effect. It also shows that failure to account for the part-time wage effect leads to a downward biased estimate of labor supply elasticities of interest. Using three different datasets, we show that both work hours and wages drop sharply at ages 62 and 65. The Social Security rules produce strong incentives to reduce work hours at these ages. We present evidence that these sharp drops in work hours cause a drop in wages for men, although we find little evidence for a similar effect among women. Estimates indicate that, holding all else ...
Working Paper
Why Do Couples and Singles Save During Retirement?
While the savings of retired singles tend to fall with age, those of retired couples tend to rise. We estimate a rich model of retired singles and couples with bequest motives and uncertain longevity and medical expenses. Our estimates imply that while medical expenses are an important driver of the savings of middle-income singles, bequest motives matter for couples and high-income singles, and generate transfers to non-spousal heirs whenever a household member dies. The interaction of medical expenses and bequest motives is a crucial determinant of savings for all retirees. Hence, to ...
Working Paper
Medicaid insurance in old age
Medicaid was primarily designed to protect and insure the poor against medical shocks. Yet, poorer people tend to live shorter lifespans and incur lower medical expenses before death than richer people. Taking these and other important dimensions of heterogeneity into account, and carefully modeling key institutional aspects, we estimate a structural model of savings and endogenous medical expenses to assess the costs and benefits of Medicaid for single retirees. ; We show that even higher-income retirees benefit from Medicaid, if they live long enough for their resources to be depleted by ...
Journal Article
Consumption and the Great Recession
In 2009, Medicaid spent over $75 billion on 5.3 million elderly beneficiaries. This article describes the Medicaid rules for the elderly and discusses their economic implications.
Journal Article
Expected income growth and the Great Recession
Consumers? expected income growth declined significantly during the Great Recession. It was the most severe drop ever observed in these data, and expectations have not yet fully recovered. Furthermore, this article shows that expected income growth is a strong predictor of actual future income and consumption growth.
Newsletter
How do the risks of living long and facing high medical expenses affect the elderly’s saving behavior?
This article shows that the elderly, especially those with high lifetime incomes, maintain large asset holdings to account for the possibility of their living a long time and facing high medical expenses.