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The Institutional Determinants of Early Retirement in Europe

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Author Info
Justina A.V. Fischer ()
Alfonso Sousa-Poza ()

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Abstract

Low fertility rates combined with increases in early retirement pose a serious challenge to the sustainability of social security systems in most industrialized countries. Therefore, it is important for policy makers to understand the determinants of early retirement and especially the role that institutional factors play in the retirement decision. However, analyzing such factors ideally requires international microdata, which have in the past been largely unavailable. To fill this void, this paper investigates early retirement determinants across several European countries using the rich 2005 SHARE (Survey of Health, Aging and Retirement in Europe) microdataset, which produces more precise estimates of the effects of institutional and economic factors like pension systems, unemployment, and employment protection legislation. The analysis shows that pension systems offering generous early retirement options encourage early departure from the labor market. In addition, pension wealth accrual rate exerts a greater influence on early retirement decisions than does the average replacement rate, while stricter employment protection legislation has no significant impact.

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File URL: http://www.vwa.unisg.ch/RePEc/usg/dp2006/DP08_fi.pdf
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Publisher Info
Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2006 with number 2006-08.

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Length: 29 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:usg:dp2006:2006-08

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Postal: Dufourstrasse 50, CH - 9000 St.Gallen
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Related research
Keywords: Early Retirement Pensions Pensions System Employment Protection

Other versions of this item:

Find related papers by JEL classification:
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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  1. Monika BÜTLER & Olivia HUGUENIN & Federica TEPPA, 2004. "What Triggers Early Retirement ? Results from Swiss Pension Funds," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.04, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
    Other versions:
  2. Richard Johnson, 2000. "The effect of old-age insurance on male retirement : evidence from historical cross-country data," Research Working Paper RWP 00-09, Federal Reserve Bank of Kansas City. [Downloadable!]
  3. Bratberg, E. & Holmas, T.H. & Thogersen, O., 2000. "Assessing the Effects of Early Retirement Programs," Norway; Department of Economics, University of Bergen 0900, Department of Economics, University of Bergen.
    Other versions:
  4. Richard W. Johnson & Amy J. Davidoff & Kevin Perese, 2003. "Health insurance costs and early retirement decisions," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(4), pages 716-729, July.
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  8. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June. [Downloadable!]
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