Recent Advances in Micromodeling: The Choice of Retiring

Summary

Recently, much attention has been devoted to econometric models as a new tool for dynamic microsimulation. In particular, microeconometric approaches to retirement decisions have been increasingly adopted for “calibrating” dynamic microsimulation frameworks aiming at endogenizing retirement choices. By doing this, both the understandment and the prediction of the effects of policy reforms (for istance, of Social Security systems) can be significantly improved. In this work an overview of the most recent developments in micromodeling retirement decisions is carried out. In particular, as for the choice of the estimation strategy, special emphasis is posed on the trade-off between the degree of realism of hypotheses, on the one hand, and on data tractability and/or estimation performance, on the other hand. Finally, some issues which represent a challenging avenue for future research are discussed.

A more extended version of this work can be found at the address: http://cerp.unito.it/Pubblicazioni/archivio/WP_CeRP/WP_28.pdf. I am grateful to Carlo Bianchi, Elsa Fornero, Wilbert Van der Klaauw, Ugo Colombino, the participants at the 2002 ESPE Congress, at the Eighth CEF Conference, at the Third Latin American Workshop in Guanajuato, and two anonymous referees for useful comments and suggestions. Funding from Murst: “Progetti di interesse nazionale” is gratefully acknowledged. The usual disclaimers apply.