Funds from this grant support a project by economist Andrew Caplin to understand the interaction between policies that stimulate greater retirement savings and those that encourage working later in life. Using a rich administrative dataset on Danish workers, Caplin will use structural estimation methods and model-driven survey questions to develop a model that will simulate workers’ responses to a variety of public policy changes. The model will predict how households, faced with wage, health, and mortality shocks, respond by changing their decision on how much to save, what medical goods and services to purchase, and whether and when to retire or to work full or part time.
Caplin’s research, focused as it is on how decisions to save and decisions to work are jointly affected by changes in the circumstances facing households, represents an unusually useful addition to the economics literature on working longer, since little is known about the interaction between savings, consumption, and decisions to enter or exit the work force. Caplin anticipates the work will result in three published papers and a workshop. The survey data he collects and the model he develops will also be made openly available for use by other researchers.