Prof. Enrico Biffis (Imperial College, Londra)
Health Insurance, Portfolio Choice, and Retirement Incentives
Abstract
We study portfolio choice and labor market participation in a continuous time setting where agents face health shocks, medical expenses, and a random lifetime. We consider different forms of employer-provided health coverage, and study their impact on dynamic portfolios and labor supply decisions. We characterize these effects in semiclosed form, providing tools to measure retirement incentives as a function of relevant state variables and in response to different health insurance schemes. A full calibration of the model matches empirically observed labor market participation patterns and portfolio decisions of US workers during the last phase of their working life. This is joint work with E. Barucci and D. Marazzina.