Financial Incentives, Health, and Retirement in Spain

Pilar García-Gómez, Sergi Jiménez-Martín, Judit Vall Castelló

Chapter in NBER book Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement (2016), David A. Wise, editor (p. 455 - 495)
Conference held September 26-28, 2013
Published in January 2016 by University of Chicago Press
© 2016 by the National Bureau of Economic Research
in NBER Book Series - International Social Security

In this work we take advantage of the detailed health information available in the Survey of Health and Retirement in Europe (SHARE) to explore the link between health, financial incentives and retirement. With this purpose, we construct a health index and classify individuals into health quintiles and use this information to assess the extent to which differences in health are translated into differences in the responsiveness to changes in financial incentives. In addition, we construct a single option value measure by compiling the information on financial incentives from the disability, the old‐age and the unemployment systems in order to consider the aggregate incentives from all the social security schemes used as pathways into retirement among individuals aged 50 to 64 in Spain. Our results show that individuals in the worse health quintiles are, indeed, the more responsive to financial incentives as they prove to be less likely to retire when incentives to continue working increase. We further perform a series of simulations to assess the expected changes in retirement choices of older individuals when some of the policy parameters are modified.

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Document Object Identifier (DOI): 10.7208/chicago/9780226262604.003.0011

This chapter first appeared as NBER working paper w19913, Financial Incentives, Health and Retirement in Spain, Pilar García-Gómez, Sergi Jiménez-Martín, Judit Vall Castelló
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