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Estimating retirement behavior with special early retirement offers

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Author Info

  • Eklöf, Matias

    ()
    (Department of Economics)

  • Hallberg, Daniel

    ()
    (Department of Economics)

Abstract

We model retirement behavior in Sweden during the 1990ies with focus on voluntary early retirement where there is an option for “buy-outs”. An employer can offer the employees generous pension programs if the employee agrees on early retirement. Earlier studies have neglected such offers, but in doing so, estimates of the individuals’ responses to financial incentives in a retirement decision are likely to be biased upward. We propose an estimation strategy where the retirement decision and the accesses to early retirement pension offers are estimated in a simultaneous equation system, yielding unbiased estimates of the model parameters. We apply the model using detailed Swedish register data. Our results indicate that the marginal effects in retirement probability w.r.t. a change in financial incentives is less pronounced if early retirement pensions are accounted for. Further, we illustrate that the early retirement probabilities would decrease by 10-30 percent if early retirement pension offers were absent.

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Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2006:13.

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Length: 38 pages
Date of creation: 17 May 2006
Date of revision:
Publication status: Published as Eklöf, Matias and Daniel Hallberg, 'Do buy-outs of older workers matter? Estimating retirement behavior with special early retirement offers' in International Journal of Manpower, 2010.
Handle: RePEc:hhs:uunewp:2006_013

Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Email:
Web page: http://www.nek.uu.se/
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Related research

Keywords: Retirement; early retirement pension; golden handshakes; occupational pension; demand for old workers;

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Cited by:
  1. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2008. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," CESifo Working Paper Series 2303, CESifo Group Munich.
  2. Palmer, Edward, 2008. "The market for retirement products in Sweden," Policy Research Working Paper Series 4748, The World Bank.
  3. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
  4. Marjan, MAES, 2008. "Does the dismantlement of early retirement schemes increase unemployment in Belgium ?," Discussion Papers (ECON - Département des Sciences Economiques) 2008041, Université catholique de Louvain, Département des Sciences Economiques.
  5. F. J. Fernández-Díaz & C. Patxot & G. Souto, 2013. "DYPES: A Microsimulation model for the Spanish retirement pension system," Working Papers 2013-06, FEDEA.
  6. Hallberg, Daniel, 2008. "Economic fluctuations and retirement of older employees," Working Paper Series 2008:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  7. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.

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