Optimal retirement with borrowing constraints and forced unemployment risk

Jang, Bong‐Gyu; Park, Seyoung; Zhao, Huainan

doi:10.1016/j.insmatheco.2020.06.002

Cited by 6 publications

(2 citation statements)

References 40 publications

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“…Auray et al, (2019) It found that delaying mandating overall income with the aim of paying asuration, could increase the overall job search rate and could lower the unemployment rate in both stationary economies of established conditions. Next Jang et al, (2020) The stated stated that two-dimensional market incompleteness caused by borrowing constraints and the risk of forced unemployment (layoffs) significantly affects consumption, investment, and optimal individual retirement strategies in the future.…”

Section: Introductionmentioning

confidence: 99%

Risk aversion and labor behavior determination factors on insurance products

Affandi¹

2022

asnaf

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Purpose—The purpose of this article is to try to look at the risk aversion determination factors that encourage the behavior of the educated workforce using or not using insurance products. The indicators used are income, education level, number of Dependents, Gender, employment status, place of residence, generation group, insurance product information Method—The analysis model used is probit regression. Primary data obtained through a survey of 111 respondents and only 93 educated workers in Aceh Province met the specifications and filled in completely. Research Results—The results show that only employment status has a positive and significant effect on labor preferences for insurance products, while other factors are not significant. Limitations — This research is still limited in samples, factors that are used as objects of research and less in-depth about the role of information affecting people's behavior. This is a suggestion for researchers to further conduct more comprehensive research. Practical Implications—The results of this study can be used as a reference for the government and companies must synergize with each other in planning insurance programs. High-income workers are expected to join insurance programs, mutual care is an important social capital to maintain the economy. The government or insurance company must increase the socialization of information on the importance of insurance programs to deal with the uncertainty of future risks.

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Section: Introductionmentioning

confidence: 99%

Risk aversion and labor behavior determination factors on insurance products

Affandi¹

2022

asnaf

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“…In either case, researchers aim at finding thresholds for wealth (or factors) that push the agent to retire. This topic remains very active recently, see Yang and Koo (2018), Park and Jeon (2019), Yang, Koo, and Shin (2020), Jang, Park, and Zhao (2020), Xu and Zheng (2020), etc.…”

Section: Introductionmentioning

confidence: 99%

Retirement decision and optimal consumption-investment under addictive habit persistence

Guan¹,

Liang²,

Yuan³

2020

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This paper studies the retirement decision, optimal investment and consumption strategies under habit persistence for an agent with the opportunity to design the retirement time. The optimization problem is formulated as an interconnected optimal stopping and stochastic control problem (Stopping-Control Problem) in a finite time horizon. The problem contains three state variables: wealth x, habit level h and wage rate w. We aim to derive the retirement boundary of this "wealth-habit-wage" triplet (x, h, w). The complicated dual relation is proposed and proved to convert the original problem to the dual one. We obtain the retirement boundary of the dual variables based on an obstacle-type free boundary problem. Using dual relation we find the retirement boundary of primal variables and feed-back forms of optimal strategies. We show that if the so-called "de facto wealth" exceeds a critical proportion of wage, it will be optimal for the agent to choose to retire immediately. In numerical applications, we show how "de facto wealth" determines the retirement decisions and optimal strategies. Moreover, we observe discontinuity at retirement boundary: investment proportion always jumps down upon retirement, while consumption may jump up or jump down, depending on the change of marginal utility. We also find that the agent with higher standard of life tends to work longer.

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