delays in claiming social security benefits this paper focuses on social security benefit claiming behavior a takeup decision that has been ignored in the previous literature using financial calculations and simulations based on an expected utility maximization model we show that delaying benefit claim for a period of time after retirement is optimal in a wide variety of cases and that gains from delay may be significant we find that approximately 10 of men retiring before their 62nd birthday delay claiming for at least one year after eligibility we estimate hazard and probit models using data from the new beneficiary data system to test four cross sectional predictions while the data suggest that too few men delay we find that the pattern of delays by early retirees is generally consistent with the hypotheses generated by our theoretical model

optimal economic policy and the problem of instrument instability it has been said that in a world of perfect knowledge regarding the structure of the economic system and the values of all exogenous variables policy making becomes a trivial problem 1 this is true in the sense that it is always possible with full knowledge and perfect foresight to choose the appropriate policy for the following period but it ignores the fact that the correct policy on a period to period basis may turn out to be impractical or even impossible in the longer run current policy decisions do not ordinarily have their impact solely in the current period but rather over a number of periods in the future thus in addition to offsetting the undesired effects of changes in exogenous variables current policy decisions must offset the current impact of past policy

the rise and decline of managerial development alfred d chandler s work highlighted the complicated interplay between markets and firms especially the arrangements created by firms to buffer and manage market forces arguably his most important work examines one aspect of firms organizational structure and how it changed in response to the competitive needs of growing businesses much the same approach can be applied to understanding other aspects of firms such as the structure of the most important jobs in corporations executive positions and how those positions have been filled over time here the interplay includes a different market the labor market the arguments that follow trace the evolution of executive roles from the early days of corporations where executive jobs were largely shaped by the labor market to internalized and bureaucratized arrangements consistent with the idea of an integrated chandlerian firm after the 1950s back to something much closer to the market dominated approach following the 1982 recession in large measure the change seems driven by the different context that business faced and the interplay with labor markets that made internal development more difficult the implications for the future of large scale chandlerian firms may be considerable copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

a search theoretic approach to monetary economics the essential function of money is its role as a medium of exchange the authors formalize this idea using a search theoretic equilibrium model of the exchange process that captures the double coincidence of wants problem with pure barter one advantage of the framework described here is that it is very tractable the authors also show that the model can be used to addre ss some substantive issues in monetary economics including the potenti al welfare enhancing role of money the interaction between specializat ion and monetary exchange and the possibility of equilibria with multip le fiat currencies copyright 1993 by american economic association

bridge jobs and partial retirement the job stopping process of older workers often includes some combination of postcareer bridge employment partial retirement and reverse retirement fewer than two fifths of household heads retire directly from career jobs over half partially retire at some point in their working lives and a quarter reenter the labor force after initially retiring in addition postcareer employment is frequently located outside the industry and occupation of the career job and there are important differences in postcareer labor force experiences by gender permanent income and career job pension status

the effect of social security on retirement in the early 1970s we analyze detailed longitudinal data on a cohort of males aged 58 67 in 1969 1973 a period of substantial increases in real social security benefits we find the following 1 the accelerating decline in labor force participation of elderly men in 1969 1973 can be explained by the large increase in real social security benefits 2 there is evidence of a liquidity constraint effect for an important subgroup of the elderly 3 the magnitude of this induced retirement effect is large enough that ignoring it can lead to serious underestimation of the fiscal implications of changes in benefit provisions our results are interpreted in the historical context of a particular cohort undergoing major unanticipated transfers of wealth the steady state effects of social security on retirement may not be the same

do pensions increase the labor supply of older men this paper investigates the relationship between pension coverage and the retirement behavior of older men pensions are associated with higher work involvement for males in their late fifties and early sixties but with lower rates of job holding for those aged 65 69 age of entry into pension employment is shown to be positively correlated with future labor supply when combined with evidence on age specific changes in labor force participation rates this pattern casts doubt on the hypothesis that broadened pension coverage explains a substantial portion of the trend towards earlier male retirement

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

the effect of social security on labor supply a cohort analysis of the notch generation this article uses aggregate birth year calendar year level data derived from the current population survey cps to estimate the effect of social security wealth on the labor supply of older men in the 1970s and 1980s the analysis focuses on measuring the impact of the 1977 amendments to the social security act which created a substantial unanticipated reduction in social security wealth for individuals born after 1916 this differential in benefits has become known as the benefit notch results indicate that labor supply continued to decline for the notch babies who received lower social security benefits than earlier cohorts

partial retirement as a separate mode of retirement behavior partial retirement is a quantitatively important retirement state that shows significant structural differences from behavioral functions of either full retirement or full time work alternative models of the choice of retirement state are estimated on a sample of white married males from the retirement history survey 1967 1973 findings suggest that while partial retirement appears to take several different forms the critical choice for a large number of older workers appears to be that of labor force participation first with either partial or full time employment determined conditionally among participants the model has good explanatory power and conforms to expectations of the effects of various relevant variables on labor supply decisions

labor market shocks and retirement do government programs matter abstract this paper argues that labor market conditions are an important and often overlooked determinant of retirement transitions in our analysis we examine how the unemployment rate affects retirement and whether the social security ss system and unemployment insurance ui system influence how older workers respond to labor market shocks we use pooled cross sectional data from the march current population survey cps in our analysis we find that downturns in the labor market increase retirement transitions and that the magnitude of this effect is comparable to that associated with moderate changes in financial incentives to retire and to the threat of a health shock facing older workers interestingly retirements only increase in response to an economic downturn once workers become ss eligible suggesting that retirement benefits may help to alleviate the income loss associated with a weak labor market we also estimate the impact of ui generosity on retirement and find little consistent evidence of an effect this suggests that in some ways ss may serve as a more effective form of unemployment insurance for older workers than ui

early retirement provisions and the labor force behavior of older men evidence from canada we examine the sequential introduction of early retirement provisions to canada s two public pension plans these reforms provide a unique opportunity to assess the effect of public pension plan parameters on labor supply behavior free of the biases that potentially affect the simple time series or cross section inference presented in many previous studies we find that the reforms led to an increase in pension receipt but had little immediate effect on labor market behavior this is due to the fact that men who initially took advantage of the early retirement provisions would otherwise have had limited labor market participation

future social security entitlements and the retirement decision abstract a critical question for social security policy is how program incentives affect retirement behavior we use the health and retirement survey hrs to examine the impact of social security incentives on male retirement we implement forward looking models whereby individuals consider the incentives to work in all future years we find that forward looking incentive measures for social security are significant determinants of retirement we also find that private pension incentives have roughly similar effects our findings suggest that social security policies that increase the incentives to work at older ages can significantly reduce the labor force exit rate of older workers

secular changes in the work and retirement patterns of older men this paper examines trends in the work and retirement patterns of males aged 58 to 63 in 1969 and 1989 respectively the labor force attachments of this group have fallen for reasons unrelated to changes in individual characteristics or occupational attainment especially sharp reductions at age 62 hint at an increasingly important role for the early retirement provisions in social security attachments to longest jobs have also declined substantially beginning at age 55 although pension incentives may be significant the observed correlations between pensions and employment status may also reflect the role of confounding factors such as poorly measured nonpension wealth

decentralized international exchange traditional models of international trade take place within trading environments in which trade is coordinated by a walrasian auctioneer who instantly matches buyers and sellers in world markets this assertion seems inconsistent with evidence suggesting that trading arrangements seem to economize on transactions costs associated with international trade recognizing these insights we depart from standard models of international trade by incorporating the difficulties in the coordination of exchange within a two country random matching model of international trade we capture a motivation for trade through comparative advantage and interpret trade across economies to be associated with an agent s endogenous choice to participate in foreign markets although an individual may decide to search abroad to obtain additional gains from trade resulting from comparative advantage she is less likely to meet trading partners abroad as search frictions are higher in the foreign country than in the domestic market using this framework we show that international trade is associated with convergence in relative prices across countries we also show that the extent of market frictions in the foreign country affects relative prices the volume of international trade and welfare levels due to market participation externalities associated with international trade we show that a movement from autarky to free trade may actually lower welfare levels we conclude by examining the possible inefficiencies associated with international trade due to the decentralized nature of exchange and the policy implications of our model

valuation equilibria with transactions costs transactions costs are a potentially important friction in macroeconomics yet the task of assessing the effects of measured transactions costs on aggregate equilibrium has proceeded very slowly for instance in the field of asset pricing the effects of observed transactions costs on security prices and other aspects of financial equilibrium remain more or less unmeasured in the area of growth accounting the effect of increased value added in the financial services sector on the efficiency of resource allocation and hence total factor productivity remains largely unmeasured as well in our view these tasks have been hindered by a perception that standard general equilibrium theory is not applicable to problems in which the re allocation of resources among users is costly for instance walter heller and ross starr s 1976 formulation of the equilibrium problem for transactions costs economies does not make the connection with standard general equilibrium theory in contrast the objective of this paper is to show that for a class of economic environments with transactions costs a simple reformulation of the commodity space allows these transactions costs economies to be studied as particular instances of gerard debreu s 1954 valuation equilibrium making the connection with established general equilibrium theory as in debreu 1954 is a useful step in the study of transactions costs and should facilitate the types of measurement tasks noted above in particular the close connection between pareto optimality and valuation equilibrium i e the first and second welfare theorems should provide a solid foundation for the quantitative study of resource allocation in the presence of transactions costs the fact that the gains from trade have been exhausted means that valuation equilibria with transactions costs cannot be improved upon i e allocations that make all consumers better off do not exist this should permit researchers to sidestep issues about institutional design which tend to make analyses of transactions costs difficult

job search requirements for unemployed at the end of working life effects on unemployment dynamics and self employment probabilities this paper investigates the extent to which job search requirements in unemployment insurance u i increase the probability of self employment as a retirement route for causal identification we apply a difference in differences approach using a dutch 2004 policy reform that introduced job search requirements in u i for persons aged 57 5 and older unemployment dynamics and self employment probabilities are studied using a dynamic multinomial logit model with unobserved heterogeneity the results suggest that job search requirements stimulated people to exit unemployment and discouraged older workers to enter unemployment the probability of self employment as an exit route to retirement increased relative to u i but not relative to paid employment

latent transversality conditions in macroeconomic stabilization policies abstract while the dutch economy was characterized by seemingly unimpeded growth in the period before 1970 the end of the 60s brought various disequilibria which are now held responsible for the structural problems of the 70s optimization over the periods 1964 70 and 1971 77 using the year to year projections of the central economic plans shows that economic policies in those years correspond most with short term stabilization objectives and that indirect real wage control could have been used as an efficient substitute for such policies sequential open loop optimizations employing sliding windows of different width then suggest that adding real wage control to the conventional objectives of economic policy may reduce the sensitivity for the choice of the planning horizon to a large extent moreover this result could form a start for obtaining a compromise between short run stabilization and moderately ambitious medium term targetting

flexible and fixed target stabilisation in an open economy abstract this paper contains a comparison in an applied framework of the effectiveness of implementing two alternative stabilisation strategies in an open economy in particular the familiar optimisation flexible target technique is compared with the newly developed dynamic tinbergen fixed target technique the fixed target approach allows for the exact achievement of targets over time when there are more targets than instruments provided the planning authorities are prepared to anticipate the target path alternatively the flexible target approach imposes the constraint of compromising all targets when the number of targets exceeds the number of instruments

indivisibilities lotteries and monetary exchange we introduce lotteries randomized trading into search theoretic models of money in a model with indivisible goods and fiat money we show goods trade with probability 1 and money trades with probability where 1 iff buyers have sufficient bargaining power with divisible goods a nonrandom quantity q trades with probability 1 and again money trades with probability where 1 iff buyers have sufficient bargaining power moreover q never exceeds the efficient quantity not true without lotteries we consider several extensions designed to get commodities as well as money to trade with probability less than 1 and to illuminate the efficiency role of lotteries