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Disability, Pension Reform, and Early Retirement in Germany

In: Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms

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  • Axel Börsch-Supan
  • Hendrik Jürges

Abstract

The aim of this paper is to describe for (West) Germany the historical relationship between health and disability on the one hand and old-age labor force participation or early retirement on the other hand. We explore how both are linked with various pension reforms. To put the historical developments into context, the paper first describes the most salient features and reforms of the pension system since the 1960s. Then we show how mortality, health and labor force participation of the elderly have changed since the 1970. While mortality (as our main measure of health) has continuously decreased and population health improved, labor force participation has also decreased, which is counterintuitive. We then look at a number of specific pension reforms in the 1970s and 1980s and show that increasing or decreasing the generosity of the pension system has had the expected large effects on old-age labor force participation. Finally, we explore the possible link between early childhood environment and early retirement by analyzing the retirement behavior of cohorts born during World War I, a period of harsh living conditions among the civilian population in Germany. Our data show higher early retirement rates among those cohorts, presumably because those cohorts still suffer from worse health on average many decades after their birth.

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This chapter was published in:

  • David A. Wise, 2012. "Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms," NBER Books, National Bureau of Economic Research, Inc, number wise11-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12388.

    Handle: RePEc:nbr:nberch:12388

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    Cited by:
    1. Osea Giuntella & Fabrizio Mazzonna, 2014. "Do Immigrants Bring Good Health?," SOEPpapers on Multidisciplinary Panel Data Research 653, DIW Berlin, The German Socio-Economic Panel (SOEP).

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