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Impact of Early Retirement Incentives on Labour Market Participation: Evidence from a Parametric Change in the Czech Republic

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  • David Kocourek
  • Filip Pertold

Abstract

We investigate the impact of a change in the Czech early retirement scheme on the labor force participation of older male workers. Using the difference-in-differences method we find that a reduction in early retirement benefits by 2–3% leads to approximately the same decrease in the probability of being inactive. Our finding implies high elasticity of older male workers’ participation rate. The public policy implication is that a reduction in early retirement benefits can serve as a very effective tool to increase the participation of older men in the Czech labor market.

Suggested Citation

  • David Kocourek & Filip Pertold, 2009. "Impact of Early Retirement Incentives on Labour Market Participation: Evidence from a Parametric Change in the Czech Republic," Working Papers 2009/7, Czech National Bank.
    • Handle: RePEc:cnb:wpaper:2009/7
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    References listed on IDEAS

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    1. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1, March.
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    5. Baker, Michael & Benjamin, Dwayne, 1999. "Early Retirement Provisions and the Labor Force Behavior of Older Men: Evidence from Canada," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 724-756, October.
    6. Borsch-Supan, Axel, 2000. "Incentive effects of social security on labor force participation: evidence in Germany and across Europe," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 25-49, October.
    7. Christian Brinch & Erik Hernæs & Steinar Strøm, 2001. "Labour Supply Effects of an Early Retirement Programme," CESifo Working Paper Series 463, CESifo.
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    More about this item

    Keywords

    Czech Republic; early retirement; labor market participation.;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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