Rising costs of public employee pension plans have caused fiscal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes, it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using Missouri administrative panel data. A Stock-Wise option value model provides a good fit to the data and predicts well out-of-sample on the effects of pension enhancements during the 1990s. The structural model is used to simulate the effect of alternatives to the current defined benefit plan.

Following permanent layoffs most women search for new jobs, but some withdraw from the labor force. We develop a joint model of the choice to undertake postdisplacement job search and unemployment durations for searchers and estimate it, using data from the 1988 Displaced Worker Survey. Maximum likelihood estimates of this "split-population" model show that labor force withdrawal is an important factor explaining the distribution of postdisplacement jobless spells. The model also allows us to distinguish the effect of any covariate on the decision to engage in postdisplacement search from its effect on search duration. Single-population models obscure this distinction.

Econometric analysis of duration data raises difficult issues of statistical inference. Building on the work of Prentice (1974) and Farewell and Prentice (1977), Addison and Portugal (1987; henceforth, AP) use the extended generalized gamma (EGG) distribution to test the sensitivity of regression estimates to more restrictive distributional assumptions which frequently have been imposed by other studies. AP find that these restrictions are rejected by data from the 1984 Displaced Worker Survey (DWS) and that imposing them creates large and variable biases in the estimated effects of the independent variables. AP also find that very different distributional forms provide the best fit for two subsamples of displaced workers. Both results suggest that many findings from earlier studies using simple parametric hazard models of unemployment duration are not robust. In this comment, we show that the sensitivity of AP's estimation results to distributional assumptions is a consequence of using an endogenous criteria to stratify the estimation sample, namely, whether or not workers collect Ul. This is an especially serious problem for a sample of displaced workers, because (a) many workers report jobless spells of zero or very few weeks; and (b) most displaced workers are Ul eligible. We also identify several other limitations of the DWS data for estimating unemployment durations and perform sensitivity analysis.