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Title: Location Choices over the Life Cycle: The Role of Relocation for Retirement
Citation Type: Working Paper
Publication Year: 2022
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Abstract: The location choice of an individual is shaped by the trade-off between job opportunities, prices, and access to amenities. I provide evidence that the determinants of this trade-off change over the individual’s life cycle: the productivity of a location is more valuable for workers than retirees, and changes in spending patterns with age imply that younger and older individuals value different types of local amenities. To study the allocation of younger and older individuals across cities, I develop and quantify an overlapping generations spatial equilibrium model with location choices for both work and retirement periods. I show that differences in local exogenous productivities and amenities for the young and the old lead to the geographic sorting by age, which is further amplified by an endogenous adjustment of amenities and productivities to the location’s age composition. I estimate that the reduction in mobility frictions observed between 1960 and 2010 allowed individuals to increasingly separate locations for work and retirement, which generated welfare gains of around 6.3 percent. Using the calibrated model, I evaluate local and aggregate effects of place-based policies that promote the reallocation of retirees to less productive cities.
Url: https://kristina-komissarova.github.io/documents/Komissarova_NYU_JMP.pdf
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Authors: Komissarova, Kristina
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Institution: New York University
Pages: 1-74
Publisher Location: New York City
Data Collections: IPUMS USA
Topics: Aging and Retirement
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