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Pension Incentives and the Pattern of Early Retirement

Author

Listed:
  • Richard Blundell

    (University College London and Institute for Fiscal Studies Financial Services Authority)

  • Costas Meghir

    (University College London and Institute for Fiscal Studies Financial Services Authority)

  • Sarah Smith

    (University College London and Institute for Fiscal Studies Financial Services Authority)

Abstract

This mix of state and private pension provision in the United Kingdom provides a rare degree of variation in pension incentives for retirement. Using a sample of individuals from the UK Retirement Survey, the paper models the probability of retirement in terms of the incentives underlying the individual"s pension plan as well as other socio-economic factors. It follows an option value approach and allows a separate role for pension wealth, for spouse"s economic characteristics and for demographic characteristics. It distinguishes between SERPS and private schemes and models eligibility to disability. The results point to significant retirement incentive effects from the pension system. Copyright Royal Economic Society 2002.

Suggested Citation

  • Richard Blundell & Costas Meghir & Sarah Smith, 2002. "Pension Incentives and the Pattern of Early Retirement," Economic Journal, Royal Economic Society, vol. 112(478), pages 153-170, March.
  • Handle: RePEc:ecj:econjl:v:112:y:2002:i:478:p:c153-c170
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    References listed on IDEAS

    as
    1. Blundell, Richard & Johnson, Paul, 1998. "Pensions and Labor-Market Participation in the United Kingdom," American Economic Review, American Economic Association, vol. 88(2), pages 168-172, May.
    2. Campbell, Nigel, 1999. "The decline of employment among older people in Britain," LSE Research Online Documents on Economics 51401, London School of Economics and Political Science, LSE Library.
    3. Meghir, Costas & Whitehouse, Edward, 1997. "Labour market transitions and retirement of men in the UK," Journal of Econometrics, Elsevier, vol. 79(2), pages 327-354, August.
    4. Richard Blundell & Paul Johnson, 1997. "Pensions and Retirement in the UK," NBER Working Papers 6154, National Bureau of Economic Research, Inc.
    5. Richard Disney & Sarah Smith, 2002. "The Labour Supply Effect of the Abolition of the Earnings Rule for Older Workers in the United Kingdom," Economic Journal, Royal Economic Society, vol. 112(478), pages 136-152, March.
    6. Campbell, Nigel, 1999. "The decline of employment among older people in Britain," LSE Research Online Documents on Economics 6501, London School of Economics and Political Science, LSE Library.
    7. Richard Disney & Costas Meghir & Edward Whitehouse, 1994. "Retirement behaviour in Britain," Fiscal Studies, Institute for Fiscal Studies, vol. 15(1), pages 24-43, February.
    8. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    9. Richard Disney, 1996. "Can We Afford to Grow Older?," MIT Press Books, The MIT Press, edition 1, volume 1, number 026204157x, December.
    10. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, June.
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