http://hdl.handle.net/2027.42/49331 Search the Channel search http://deepblue.lib.umich.edu/simple-search http://hdl.handle.net/2027.42/64139 Title: Work Disability, Work, and Justification Bias in Europe and the U.S.<br/><br/>Authors: Kapteyn, Arie; Smith, James P.; van Soest, Arthur<br/><br/>Abstract: To analyze the effect of health on work, many studies use a simple self-assessed health measure based upon a question such as “do you have an impairment or health problem limiting the kind or amount of work you can do?” A possible drawback of such a measure is the possibility that different groups of respondents may use different response scales. This is commonly referred to as “differential item functioning” (DIF). A specific form of DIF is justification bias: to justify the fact that they don’t work, non-working respondents may classify a given health problem as a more serious work limitation than working respondents. In this paper we use anchoring vignettes to identify justification bias and other forms of DIF across countries and socio-economic groups among older workers in the U.S. and Europe. Generally, we find differences in response scales across countries, partly related to social insurance generosity and employment protection. Furthermore, we find significant evidence of justification bias in the U.S. but not in Europe, suggesting differences in social norms concerning work. Sat, 01 Aug 2009 00:00:00 GMT http://hdl.handle.net/2027.42/64138 Title: Retirement in a Life Cycle Model of Labor Supply with Home Production<br/><br/>Authors: Rogerson, Richard; Wallenius, Johanna<br/><br/>Abstract: We analyze the forces that can generate retirement in different versions of standard life cycle models of labor supply. While nonconvexities in production can generate retirement, we show that the size of nonconvexities needed increases sharply as the intertemporal elasticity of substitution for labor decreases. In a model with home production, we show that these models imply a large increase in time devoted to home production at retirement. This is contrary to what is found in the ATUS data. We suggest that nonconvexities in the enjoyment of leisure time may be a promising alternative feature to generate retirement. Sat, 01 Aug 2009 00:00:00 GMT http://hdl.handle.net/2027.42/64137 Title: Extending Life Cycle Models of Optimal Portfolio Choice: Integrating Flexible Work, Endogenous Retirement, and Investment Decisions with Lifetime Payouts<br/><br/>Authors: Chai, Jingjing; Horneff, Wolfram; Maurer, Raimond; Mitchell, Olivia S.<br/><br/>Abstract: This paper derives optimal life cycle portfolio asset allocations as well as annuity purchases trajectories for a consumer who can select her hours of work and also her retirement age. Using a realistically-calibrated model with stochastic mortality and uncertain labor income, we extend the investment universe to include not only stocks and bonds, but also survival-contingent payout annuities. We show that making labor supply endogenous raises older peoples’ equity share; substantially increases work effort by the young; and markedly enhances lifetime welfare. Also, introducing annuities leads to earlier retirement and higher participation by the elderly in financial markets. Finally, when we allow for an age-dependent leisure preference parameter, this fits well with observed evidence in that it generates lower work hours and smaller equity holdings at older ages as well as sensible retirement age patterns. Sat, 01 Aug 2009 00:00:00 GMT http://hdl.handle.net/2027.42/64133 Title: The Efficiency of Pension Menus and Individual Portfolio Choice in 401(k) Pensions<br/><br/>Authors: Tang, Ning; Mitchell, Olivia S.; Mottola, Gary R.; Utkus, Stephen P.<br/><br/>Abstract: Though millions of US workers have 401(k) plans, few studies evaluate participant investment performance. Using data on over 1,000 401(k) plans and their participants, we identify key portfolio investment inefficiencies and attribute them to offered investment menus versus individual portfolio choices. We show that the vast majority of 401(k) plans offers reasonable investment menus. Nevertheless, participants “undo” the efficient menu and make substantial mistakes: in a 20-year career it will reduce retirement wealth by one-fifth, in fact, more than what a naive allocation strategy would yield. We outline implications for plan sponsors and participants seeking to enhance portfolio efficiency: don’t just offer or choose more funds, but help people invest smarter. Sat, 01 Aug 2009 00:00:00 GMT