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The Effect of Increasing the Early Retirement Age on Savings Behavior Before Retirement

Author

Listed:
  • Etgeton, Stefan

    (Federal Ministry of Labor and Social Affairs (BMAS), Germany)

  • Fischer, Björn

    (ZEW Mannheim)

  • Ye, Han

    (University of Mannheim)

Abstract

Facing a reduction in pension generosity, individuals can compensate the loss by working longer or saving more. This paper shows that the impact of changes in pension generosity on saving crucially depends on the possibility of prolonging future employment. Exploiting across cohort variation in expected pension wealth induced by a 3-year lift in early retirement age for women born after 1951 in Germany, we show evidence of a reduction in private savings rate and an increase in leisure consumptions in case of strong responses in future labor earnings.

Suggested Citation

  • Etgeton, Stefan & Fischer, Björn & Ye, Han, 2019. "The Effect of Increasing the Early Retirement Age on Savings Behavior Before Retirement," IZA Discussion Papers 12744, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12744
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    pension reform; early retirement age; savings; pension wealth;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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