The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands

This paper analyzes retirement saving and portfolio choice in the United States, Italy, and the Netherlands. While these countries enjoy roughly the same standard of living, they vary widely in their institutional organization of retirement income provisions. Building on extensions of the life cycle model, we derive hypotheses on the implications of institutional differences for wealth accumulation and portfolio composition. Examples of implications are that the ratio of net worth and gross wealth should be highest in Italy, that Dutch households should hold the lowest wealth levels at retirement and that the ownership of risky assets should be highest in the U.S. We investigate these and other hypotheses at both the macro and micro level and find that the data are generally consistent with the hypotheses.

Hypothetical Intertemporal Consumption Choices

The paper extends and replicates part of the analysis by Barsky, Juster, Kimball, and Shapiro (1997), which exploits hypothetical choices among different consumption streams to infer intertemporal substitution elasticities and rates of time preference. We use a new and much larger dataset than Barsky et al. Furthermore, we estimate structural models of intertemporal choice, while parameterizing the parameters of interest as a function of relevant individual characteristics. We also consider ''behavioral'' extensions, like habit formation. Models with habit formation appear to be superior to models with intertemporally additive preferences.

Mode and Context Effects in Measuring Household Assets

Differences in answers in Internet and traditional surveys can be due to selection, mode, or context effects. We exploit unique experimental data to analyze mode and context effects controlling for arbitrary selection. The Health and Retirement Study (HRS) surveys a random sample of the US 50+ population, with CAPI or CATI core interviews once every two years. In 2003 and 2005, random samples were drawn from HRS respondents in 2002 and 2004 willing and able to participate in an Internet interview. Comparing core and Internet survey answers of the same people, we analyze mode and context effects, controlling for selection. We focus on household assets, for which mode effects in Internet surveys have rarely been studied. We find some large differences between the first Internet survey and the other three surveys which we interpret as a context and question wording effect rather than a pure mode effect.Internet surveys, CAPI, CATI, portfolio choice

Grossman’s Missing Health Threshold

We present a generalized solution to Grossman’s model of health capital (1972), relaxing the widely used assumption that individuals can adjust their health stock instantaneously to an “optimal” level without adjustment costs. The Grossman model then predicts the existence of a health threshold above which individuals do not demand medical care. Our generalized solution addresses a significant criticism: the model’s prediction that health and medical care are positively related is consistently rejected by the data. We suggest structural and reduced form equations to test our generalized solution and contrast the predictions of the model with the empirical literature.health, demand for health, health capital, medical care, labor

Early retirement and employment of the young

Policy makers have often argued that an additional benefit of facilitating early retirement is that it creates employment for the young. This may happen if older and younger workers are substitutes. Nowadays policy makers’ goals are to discourage early retirement to counter the economic consequences of an aging population and, interestingly, the consequences for youth employment appear to play no role in this. This paper studies the nexus between employment of older and younger workers in more depth, if only to put any concerns for adverse effects of later retirement to rest. To empirically investigate this issue we estimate a dynamic model of employment of the young, prime age and old people using panel data of 22 OECD countries over the time period 1960-2004. Our empirical analysis does not support the hypothesis that employment of the young and old are substitutes and finds some minor complementarities. This suggests that discouraging early retirement will have no adverse effect on youth employment.