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Does raising the early retirement age increase employment of older workers?

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  • Staubli, Stefan
  • Zweimüller, Josef

Abstract

Two pension reforms in Austria increased the early retirement age (ERA) from 60 to 62 for men and from 55 to 58.25 for women. We find that raising the ERA increased employment by 9.75 percentage points among affected men and by 11 percentage points among affected women. The reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims. Specifically, unemployment increased by 12.5 percentage points among men and by 11.8 percentage points among women. The employment response was largest among high-wage and healthy workers, while low-wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the ERA via unemployment benefits. Taking spillover effects and additional tax revenues into account, we find that for a typical birth-year cohort a one year increase in the ERA resulted in a reduction of net government expenditures of 107million euros for men and of 122million euros for women.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 108 (2013)
Issue (Month): C ()
Pages: 17-32

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Handle: RePEc:eee:pubeco:v:108:y:2013:i:c:p:17-32

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Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Retirement age; Policy reform; Labor supply; Disability; Unemployment;

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References

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  1. Karlström, Anders & Palme, Mårten & Svensson, Ingemar, 2008. "The employment effect of stricter rules for eligibility for DI: Evidence from a natural experiment in Sweden," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2071-2082, October.
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  12. Hans Bloemen & Stefan Hochguertel & Marloes Lammers, 2011. "Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits," Tinbergen Institute Discussion Papers 11-008/3, Tinbergen Institute.
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    • Josef Zweimüller & Rudolf Winter-Ebmer & Rafael Lalive & Andreas Kuhn & Jean-Philippe Wuellrich & Oliver Ruf & Simon Büchi, 2009. "Austrian social security database," IEW - Working Papers 410, Institute for Empirical Research in Economics - University of Zurich.
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Citations

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Cited by:
  1. Alfonso R. Sánchez & J. Ignacio García-Pérez & Sergi Jiménez, 2014. "Delaying the Normal and Early Retirement Ages in Spain: Behavioural and Welfare Consequences for Employed and Unemployed Workers," Working Papers 761, Barcelona Graduate School of Economics.
  2. Markus Knell, 2013. "The Austrian System of Individual Pension Accounts – An Unfinished Symphony," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 47-62.
  3. Miyazaki, Koichi, 2014. "The effects of the raising-the-official-pension-age policy in an overlapping generations economy," Economics Letters, Elsevier, vol. 123(3), pages 329-332.

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