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Financial incentives to postpone retirement and further effects on employment -- Evidence from a natural experiment

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  • Hanel, Barbara

Abstract

This paper examines the effect of the introduction of permanent benefit reductions for early retirees (i) on the duration until benefit claiming and (ii) on the duration until exit from gainful employment. I estimate discrete time duration models using different error term specifications. Administrative data containing the full earnings history of the individuals are used. Since the reform implementing the benefit reductions was a natural experiment, under some assumptions a causal effect can be identified. The permanent reduction of retirement benefit amounts causes a postponement of claiming benefits by about 14Â months and a delay of employment exit by about 10Â months on average.

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  • Hanel, Barbara, 2010. "Financial incentives to postpone retirement and further effects on employment -- Evidence from a natural experiment," Labour Economics, Elsevier, vol. 17(3), pages 474-486, June.
  • Handle: RePEc:eee:labeco:v:17:y:2010:i:3:p:474-486
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    Cited by:

    1. Börsch-Supan, Axel & Bucher-Koenen, Tabea & Coppola, Michela & Lamla, Bettina, 2014. "Savings in Times of Demographic Change: Lessons from the German Experience," MEA discussion paper series 201418, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    2. Engels, Barbara & Geyer, Johannes & Haan, Peter, 2017. "Pension incentives and early retirement," Labour Economics, Elsevier, pages 216-231.
    3. Holger Lüthen, 2014. "Rente und Reform: Lehren aus der Vergangenheit," DIW Roundup: Politik im Fokus 14, DIW Berlin, German Institute for Economic Research.
    4. Andreas Thiemann, 2015. "Pension Wealth and Maternal Employment: Evidence from a Reform of the German Child Care Pension Benefit," Discussion Papers of DIW Berlin 1499, DIW Berlin, German Institute for Economic Research.
    5. Bender, Keith A. & Mavromaras, Kostas G. & Theodossiou, Ioannis & Wei, Zhang, 2014. "The Effect of Wealth and Earned Income on the Decision to Retire: A Dynamic Probit Examination of Retirement," IZA Discussion Papers 7927, Institute for the Study of Labor (IZA).
    6. Giesecke, Matthias Nicolas & Yang, Guanzhong, 2016. "The Effect of Financial Incentives on Retirement Decision Making under Different Schemes of Information Provision: Experimental Evidence," Annual Conference 2016 (Augsburg): Demographic Change 145548, Verein für Socialpolitik / German Economic Association.
    7. Hanel, Barbara & Riphahn, Regina T., 2012. "The timing of retirement — New evidence from Swiss female workers," Labour Economics, Elsevier, pages 718-728.
    8. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, pages 245-264.
    9. Geyer, Johannes & Engels, Barbara & Haan, Peter, 2016. "Changing incentives for early retirement - Causal evidence from a cohort based pension reform," Annual Conference 2016 (Augsburg): Demographic Change 145737, Verein für Socialpolitik / German Economic Association.
    10. Bönke, Timm & Kemptner, Daniel & Lüthen, Holger, 2016. "Effectiveness of early retirement disincentives: Individual welfare, distributional and fiscal implications," Discussion Papers 2016/2, Free University Berlin, School of Business & Economics.
    11. Eilers, Lea & Kramer, Anica & Tamm, Marcus, 2014. "Personen, die nicht am Erwerbsleben teilnehmen: Analyse sozio-ökonomischer Merkmale unter besonderer Berücksichtigung des Haushaltskontextes und Bestimmung des Arbeitskräftepotenzials," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 111488.
    12. Matthias Giesecke, 2014. "Actuarial Adjustments, Retirement Behaviour and Worker Heterogeneity," Ruhr Economic Papers 0490, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. Leinonen, Taina & Laaksonen, Mikko & Chandola, Tarani & Martikainen, Pekka, 2016. "Health as a predictor of early retirement before and after introduction of a flexible statutory pension age in Finland," Social Science & Medicine, Elsevier, pages 149-157.
    14. repec:zbw:rwirep:0490 is not listed on IDEAS
    15. Axel Börsch-Supan & Tabea Bucher-Koenen & Michela Coppola & Bettina Lamla, 2015. "Savings In Times Of Demographic Change: Lessons From The German Experience," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 807-829, September.
    16. Kemptner, Daniel & Timm, Boenke & Holger, Luethen, 2014. "The introduction of disincentives for early retirement and its effect on labor market participation," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100446, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Retirement insurance Labor force participation Natural experiment;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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