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Assessing the short-term impact of pension reforms on older workers' participation rates in the EU: a diff-in-diff approach

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Author Info

  • Alfonso Arpaia
  • Kamil Dybczak
  • Fabiana Pierini

Abstract

After presenting an extensive overview of the reforms undertaken in the EU between 1990 and 2006, The paper assess with a diff-in-diff technique the short-term effects of pension reforms on the participation rates of individuals aged between 50 and 64 years. The analysis suggests that in the short-term pension reforms have different effects on the participation rate of men and women. First, reforms tightening the access to early retirement have a positive effect on female participation, but reduce somewhat male participation rates. Second, the results for non-fundamental reforms are more uncertain. Third, reforms that change the way of financing pensions or the eligibility conditions (what we dubbed fundamental reforms), usually with long phasing-in periods, may have unintended short-run effects on the female participation rate. Thus, our findings point at the importance of designing pension reforms and strategies to reform social security that reduce the risks of undesired effects on the decision to remain in the labour market. Workers' information about pension rules and uncertainties about long transition periods may influence in the short-term the retirement decision in a way which is not consistent with the intended effects of the reform

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Bibliographic Info

Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 385.

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Length: 44 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:euf:ecopap:0385

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Keywords: Diff-in-Diff; pension reforms; participation rates; Arpaia; Dybczak; Pierini;

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References

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  1. Ben J. Heijdra & Ward E. Romp, 2007. "Retirement, Pensions, and Ageing," CESifo Working Paper Series 1974, CESifo Group Munich.
  2. David H. Autor & John J. Donohue & Stewart J. Schwab, 2004. "The Employment Consequences of Wrongful-Discharge Laws: Large, Small, or None at All?," American Economic Review, American Economic Association, vol. 94(2), pages 440-446, May.
  3. Coakley, Jerry & Fuertes, Ana-Maria & Smith, Ron, 2006. "Unobserved heterogeneity in panel time series models," Computational Statistics & Data Analysis, Elsevier, vol. 50(9), pages 2361-2380, May.
  4. David E. Bloom & David Canning & Michael Moore, 2007. "A Theory of Retirement," NBER Working Papers 13630, National Bureau of Economic Research, Inc.
  5. David Bloom & David Canning & Rick Mansfield & Michael Moore, 2006. "Demographic Change, Social Security Systems, and Savings," PGDA Working Papers 1906, Program on the Global Demography of Aging.
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Cited by:
  1. Giorgio Brunello & Monica Langella, 2013. "Bridge jobs in Europe," IZA Journal of Labor Policy, Springer, vol. 2(1), pages 1-18, December.

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