To claim or to retire

To claim or to retire PurposeThe purpose of this paper is to use the Health and Retirement Study to examine the social security (SS) claiming decision of older Americans, with a focus on the behavior of the unemployed.Design/methodology/approachUsing a duration model first, and a bivariate probit framework then, the author investigates whether older unemployed individuals lacking liquidity use SS benefits as a safety net in order to finance consumption during an unemployment episode, even if they do not retire at the same time. In this way, SS might be thought as a form of unemployment insurance (UI) which would allow them to maintain their standard of living during their job search.FindingsThe author finds evidence of a claiming pattern specific to the unemployed: they claim sooner than full-time workers, even when they do not retire at the same time. They also seem to discontinue this behavior when their access to UI is extended, which gives support to the author’s hypothesis that the unemployed workers, who lack liquidity, claim their SS benefits even if they do not wish to retire, as a source of alternative unemployment benefits.Originality/valueBy focusing on the SS claiming behavior of the unemployed rather than on their retirement patterns, this paper sheds light on the social insurance role of SS retirement benefits for unemployed workers who are not willing to retire, but need a new source of income while they continue looking for a job. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

To claim or to retire

International Journal of Manpower, Volume 38 (3): 25 – Jun 5, 2017

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0143-7720
DOI
10.1108/IJM-08-2015-0127
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to use the Health and Retirement Study to examine the social security (SS) claiming decision of older Americans, with a focus on the behavior of the unemployed.Design/methodology/approachUsing a duration model first, and a bivariate probit framework then, the author investigates whether older unemployed individuals lacking liquidity use SS benefits as a safety net in order to finance consumption during an unemployment episode, even if they do not retire at the same time. In this way, SS might be thought as a form of unemployment insurance (UI) which would allow them to maintain their standard of living during their job search.FindingsThe author finds evidence of a claiming pattern specific to the unemployed: they claim sooner than full-time workers, even when they do not retire at the same time. They also seem to discontinue this behavior when their access to UI is extended, which gives support to the author’s hypothesis that the unemployed workers, who lack liquidity, claim their SS benefits even if they do not wish to retire, as a source of alternative unemployment benefits.Originality/valueBy focusing on the SS claiming behavior of the unemployed rather than on their retirement patterns, this paper sheds light on the social insurance role of SS retirement benefits for unemployed workers who are not willing to retire, but need a new source of income while they continue looking for a job.

Journal

International Journal of ManpowerEmerald Publishing

Published: Jun 5, 2017

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