Labour Force Participation of the Elderly under Limited Social Insurance: Essays on Retirement and Social Security in Mexico

• Main Author: Miranda-Munoz, Martha
• Published: University of Essex 2007
• Subjects: 337
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.486195

This thesis examines retirement when social insurance is limited to workers of the formal sector of the labour market. Using Mexican cohort data it addresses issues such as when elderly males retire, what are the incentives to retire provided by social security and how have they changed over time, what is the relationship between social security institutions and retirement behaviour, and the issue of sample-selection bias due to endogenous mortality. Population estimates of the retirement age from a censored regression show that the higher the educational skills of individuals the sooner they retire; by looking at changes in the retirement age over time it is found that it has increased for successive generations-as younger cohorts have a higher retirement age than older cohorts. These estimates are interpreted with caution as I suspect they might be affected by endogenous mortality selection.A weighted measure of retirement incentives that accounts for an informal sector is constructed to examine the financial gain from postponing retirement. Over time, these are reduced dramatically for younger cohorts after economic crises and contractions in real wages. When retirement outcomes are regressed on the measure of retirement incentives it is found that social security is important in determining retirement status; pension wealth is positively and strongly associated with the propensity to retire.