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Retirement Status and State Dependence: A Longitudinal Study of Older Men

This paper examines the role of state dependence in explaining the retirement status of older men. Following from the work of Heckman and others, apparent and true state dependence are distinguished in a dynamic retirement model. Using a 2-year longitudinal sample of men aged 58-62 in 1969, apparent and true state dependence are controlled for through estimation of an error-components model and a retirement-transition model. The results indicate substantial evidence of state dependence.