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Retirement Decisions in Transition: Microeconometric Evidence from Slovenia

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  • Polanec, Sašo
  • Ahčan, Aleš
  • Verbič, Miroslav

Abstract

In this article, we analyse old-age retirement decisions of Slovenian men and women, eligible to retire in the period 1997-2003. In comparison to established market economies, we find relatively high hazard rates of retirement that decline with age. This unusual pattern can partly be attributed to weak incentives to work, inherent in the design of the pension system and reflected in predominantly negative values of accruals, and to transition-specific increase in wage inequality in the late 1980s and early 1990s. This is reflected in low wages and relatively high pensions of less productive (skilled) workers and vice versa. We find that the probability of retirement decreases with option value to work and net wages, although the response to the former, when controlling for the latter, is rather weak. Our results also imply that less educated individuals and individuals with greater personal wealth are more likely to retire.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28460.

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Date of creation: Dec 2010
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Handle: RePEc:pra:mprapa:28460

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Keywords: option value; retirement decisions; transition;

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Cited by:
  1. Aristovnik, Aleksander & Jaklič, Ksenja, 2013. "Job Satisfaction of Older Workers as a Factor of Promoting Labour Market Participation in the EU: The Case of Slovenia," MPRA Paper 48809, University Library of Munich, Germany.
  2. Miroslav Verbič & Rok Spruk, 2014. "Aging Population and Public Pensions: Theory and Macroeconometric Evidence," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(3), pages 289-316, June.

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