The option value model has been estimated based on a sample of 1500 salesmen 50 years of age or older on January 1, 1981, selected at random from the firm data. All persons in the sample are men performing similar jobs. To facilitate earnings forecasts, the sample are man restricted to persons who had at least three years of service before 1980, the first year of our retirement future income streams. However, the pension and Social Security calculations are quite cumbersome. Beyond its substantial computational advantages, a justification for the approximation that we use is that the benefits calculations involve the entire earnings history of the individual. At least for values of r in the near future, the unknown elements in these calculations are small.
The option value model has been estimated based on a sample of 1500 salesmen 50 years of age or older on January 1, 1981, selected at random from the firm data. All persons in the sample are men performing similar jobs. To facilitate earnings forecasts, the sample are man restricted to persons who had at least three years of service before 1980, the first year of our retirement future income streams. However, the pension and Social Security calculations are quite cumbersome. Beyond its substantial computational advantages, a justification for the approximation that we use is that the benefits calculations involve the entire earnings history of the individual. At least for values of r in the near future, the unknown elements in these calculations are small.
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