Delaying Retirement? A Life Cycle Model of Older Women’s Labor Supply
Debasmita Das1
1Department of Economics
Labor force participation of American women has greatly expanded into their 60s and even into their 70s since late 1980s. In this paper, I develop a dynamic structural life-cycle model of labor supply to explore relative contributions of four potential channels that account for increase in labor force participation of women in later stages of their life cycle: (1) returns to human capital accumulated earlier in life cycle; (2) health related shocks, survival risk and health insurance; (3) risks associated with marital status; and (4) changes in the Social Security policy rules and benefits. I estimate the model using the Method of Simulated Moments applied to data from the Panel Study of Income Dynamics (PSID) and the Health and Retirement Study (HRS) for three cohorts of American women (1935, 1945 and 1955 birth-year cohorts). I perform a series of counterfactual policy reforms to explore relative importance of the various channels.