Early retirement in Germany is very costly and amplifies the burden which the German public pension system has to carry due to population aging. This paper shows that the German pension system provides strong incentives to retire early. The paper provides relatively robust econometric evidence for the strength of incentive effects on old age labor supply, using several specifications of incentive variables. The econometric estimates are used to simulate the individual responses to policy changes. The adjustment factors for early retirement introduced by the 1992 pension reform are estimated to increase the retirement age of men by about 1.5 years. This increase is almost the same as the effect from a shift in the “normal retirement” age from 65 to 67. Introducing (almost) fair adjustments (6% per year of delay) would increase the retirement age by about 2 years and 2 months. The effects are about half the size for women.
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Paper provided by Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim in its series MEA discussion paper series with number
02020.
Length: Date of creation: 01 Mar 2002 Date of revision: Handle: RePEc:mea:meawpa:02020
Contact details of provider: Postal: MEA - Mannheimer Forschungsinstitut Ökonomie und Demographischer Wandel, L13, 17, University of Mannheim, 68131 Mannheim Phone: +49/621/181.1862 Fax: +49/621/181.1863 Web page: http://www.mea.uni-mannheim.de/
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Axel Börsch-Supan & Reinhold Schnabel & Simone Kohnz & Giovanni Mastrobuoni, 2004.
"Micro-Modeling of Retirement Decisions in Germany,"
NBER Chapters,
in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 285-344
National Bureau of Economic Research, Inc.
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Find related papers by JEL classification: Z00 - Other Special Topics - - General - - - General
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.:
Axel Borsch-Supan & Reinhold Schnabel, 1999.
"Social Security and Retirement in Germany,"
NBER Chapters,
in: Social Security and Retirement around the World, pages 135-180
National Bureau of Economic Research, Inc.
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