Should We Retire Earlier in Order to Look after Our Parents? The Role of Immigrants
Posted: 28 Feb 2012
Date Written: November 1, 2011
This paper aims to detect whether or not people could work for more years in the presence of a more flourishing and cheaper formal care market, which, in turn, would provide support for people who are still at work and who have to cope with the care of their elderly parents and relatives. We focus on the flow of immigrants as a key variable in order to detect whether or not this channel is at work. We disentangle retirement decisions, first by modelling retirement choice using a simple life-cycle framework in which caring for parents is introduced into the choice set. We then correlate retirement choice with the gap between the foregone salary if early retirement is chosen and the price of formal care. The findings show that immigrants contribute to the postponement of retirement for women only.
According to our estimates, we predict that the increase in immigration rate (equal to 4 percentage points) which occurred over the period 2000-2008 raised the retirement age for Italian women (with parents who are still alive) by almost one year, while the impact on men was non-existent.
Keywords: retirement decisions, life cycle, option value, international migration, long-term care
JEL Classification: J22, J26, F22
Suggested Citation: Suggested Citation