UCLouvain Finance Seminar: Enrico Biffis

Health Insurance, Portfolio Choice, and Retirement Incentives

Enrico Biffis, Imperial College London

We study portfolio choice and labor market participation in a continuous time setting when agents face health shocks, medical expenses, and an uncertain lifetime. We consider different forms of private and employer-provided health coverage, and study their impact on dynamic portfolios and labor supply decisions. We characterize these effects in semiclose 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 lives. This is joint work with Emilio Barucci and Daniele Marazzina.