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Firms and Early Retirement: Offers That One Does Not Refuse

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Author Info
Lutz Bellmann () (Institute for Employment Research (IAB), University of Hannover and IZA)
Florian Janik () (Institute for Employment Research (IAB))
Abstract

According to the Hutchens (1999) model, early retirement is not explained as a result of maximizing expected individual utility but rather as a demand-side phenomenon arising from a firm’s profit-maximizing behaviour. Firms enter into contracts with their employees that include clauses about early retirement. In response to demand or technological shocks, workers receive retirement offers from their employers which cannot be rejected by rational actors. Using the IAB Establishment Panel 2003-2006, the relationship between indicators of demand and technological shocks and the incidence and amount of early retirement is analysed. The results provide general support to the Hutchens model.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2931.

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Length: 24 pages
Date of creation: Jul 2007
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Handle: RePEc:iza:izadps:dp2931

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Related research
Keywords: (involuntary) early retirement; labour demand; panel data;

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Find related papers by JEL classification:
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lumsdaine, Robin L. & Mitchell, Olivia S., 1999. "New developments in the economic analysis of retirement," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 49, pages 3261-3307 Elsevier. [Downloadable!] (restricted)
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  2. Desmet, Raphael & Jousten, Alain & Perelman, Sergio, 2005. "The Benefits of Separating Early Retirees from the Unemployed: Simulation Results for Belgian Wage Earners," CEPR Discussion Papers 5077, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. David Dorn & Alfonso Sousa-Poza, 2005. "Early Retirement: Free Choice or Forced Decision," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  4. Sarah Smith, 2006. "The retirement-consumption puzzle and involuntary early retirement: Evidence from the British Household Panel Survey," The Centre for Market and Public Organisation 06/138, Department of Economics, University of Bristol, UK. [Downloadable!]
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  5. David Dorn & Alfonso Sousa-Poza, 2007. "‘Voluntary’ and ‘Involuntary’ Early Retirement: An International Analysis," IZA Discussion Papers 2714, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-38, July. [Downloadable!] (restricted)
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  7. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
  8. Stern, Steven, 1987. "Promotion and Optimal Retirement," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S107-23, October. [Downloadable!] (restricted)
  9. Romain Duval, 2003. "The Retirement Effects of Old-Age Pension and Early Retirement Schemes in OECD Countries," OECD Economics Department Working Papers 370, OECD, Economics Department. [Downloadable!]
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