IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v47y2017icp216-231.html
   My bibliography  Save this article

Pension incentives and early retirement

Author

Listed:
  • Engels, Barbara
  • Geyer, Johannes
  • Haan, Peter

Abstract

In this paper we exploit a cohort-specific pension reform to estimate the labour market effects of changes in the financial incentives to retire. In particular, we analyse the effects of the introduction of cohort-specific deductions for early retirement on female retirement, employment and unemployment. For the empirical analysis we use high-quality administrative data from the German pension insurance. We present evidence for sizeable labour market effects. In addition to direct effects on women older than 60 we find important anticipation effects before reaching the pension eligibility age. Overall we document that the pension reform leads to a postponement of retirement, an increase in employment and a shifting in unemployment over age rather than a substitution into unemployment.

Suggested Citation

  • Engels, Barbara & Geyer, Johannes & Haan, Peter, 2017. "Pension incentives and early retirement," Labour Economics, Elsevier, vol. 47(C), pages 216-231.
  • Handle: RePEc:eee:labeco:v:47:y:2017:i:c:p:216-231
    DOI: 10.1016/j.labeco.2017.05.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537116302779
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lukas Inderbitzin & Stefan Staubli & Josef Zweimüller, 2016. "Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 253-288, February.
    2. Barbara Berkel & Axel Börsch-Supan, 2004. "Pension Reform in Germany: The Impact on Retirement Decisions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 393-393, September.
    3. Sikandar Siddiqui, 1997. "The pension incentive to retire: Empirical evidence for West Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(4), pages 463-486.
    4. Xiaoyan Li & Nicole Maestas, 2008. "Does the Rise in the Full Retirement Age Encourage Disability Benefits Applications? Evidence from the Health and Retirement Study," Working Papers wp198, University of Michigan, Michigan Retirement Research Center.
    5. Giesecke, Matthias & Kind, Michael, 2013. "Bridge Unemployment in Germany: Response in Labour Supply to an Increased Early Retirement Age," Ruhr Economic Papers 410, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. 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.
    7. Weber, Andrea & Manoli, Dayanand, 2016. "The Effects of Increasing the Early Retirement Age on Employment of Older Workers," Annual Conference 2016 (Augsburg): Demographic Change 145549, Verein für Socialpolitik / German Economic Association.
    8. Hanel, Barbara, 2012. "The effect of disability pension incentives on early retirement decisions," Labour Economics, Elsevier, vol. 19(4), pages 595-607.
    9. Chan, Sewin & Stevens, Ann Huff, 2004. "Do changes in pension incentives affect retirement? A longitudinal study of subjective retirement expectations," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1307-1333, July.
    10. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    11. Staubli, Stefan & Zweimüller, Josef, 2013. "Does raising the early retirement age increase employment of older workers?," Journal of Public Economics, Elsevier, vol. 108(C), pages 17-32.
    12. Dayanand S. Manoli & Andrea Weber, 2016. "The Effects of the Early Retirement Age on Retirement Decisions," NBER Working Papers 22561, National Bureau of Economic Research, Inc.
    13. Welteke, Clara & Geyer, Johannes & Haan, Peter, 2016. "Early retirement eligibility and employment behavior: evidence from a cohort based pension reform," Annual Conference 2016 (Augsburg): Demographic Change 145783, Verein für Socialpolitik / German Economic Association.
    14. Karlström, Anders & Palme, Mårten & Svensson, Ingemar, 2008. "The employment effect of stricter rules for eligibility for DI: Evidence from a natural experiment in Sweden," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2071-2082, October.
    15. Staubli, Stefan, 2011. "The impact of stricter criteria for disability insurance on labor force participation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1223-1235, October.
    16. Lex Borghans & Anne C. Gielen & Erzo F. P. Luttmer, 2014. "Social Support Substitution and the Earnings Rebound: Evidence from a Regression Discontinuity in Disability Insurance Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 34-70, November.
    17. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
    18. Cribb, Jonathan & Emmerson, Carl & Tetlow, Gemma, 2016. "Signals matter? Large retirement responses to limited financial incentives," Labour Economics, Elsevier, vol. 42(C), pages 203-212.
    19. Hanel, Barbara & Riphahn, Regina T., 2012. "The timing of retirement — New evidence from Swiss female workers," Labour Economics, Elsevier, vol. 19(5), pages 718-728.
    20. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1.
    21. Kadir Atalay & Garry F. Barrett, 2015. "The Impact of Age Pension Eligibility Age on Retirement and Program Dependence: Evidence from an Australian Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 71-87, March.
    22. repec:zbw:rwirep:0410 is not listed on IDEAS
    23. Norma B. Coe & Kelly Haverstick, 2010. "Measuring the Spillover to Disability Insurance Due to the Rise in the Full Retirement Age," Working Papers, Center for Retirement Research at Boston College wp2010-20, Center for Retirement Research, revised Dec 2010.
    24. Mastrobuoni, Giovanni, 2009. "Labor supply effects of the recent social security benefit cuts: Empirical estimates using cohort discontinuities," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1224-1233, December.
    25. Ralf K. Himmelreicher & Michael Stegmann, 2008. "European Data Watch: New possibilities for socio-economic research through longitudinal data from the Research Data Center of the Federal German Pension Insurance (FDZ-RV)," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(4), pages 647-660.
    26. Duggan, Mark & Singleton, Perry & Song, Jae, 2007. "Aching to retire? The rise in the full retirement age and its impact on the social security disability rolls," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1327-1350, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2018. "Labor Market and Distributional Effects of an Increase in the Retirement Age," IZA Discussion Papers 11618, Institute for the Study of Labor (IZA).
    2. repec:iab:iabfme:201801_en is not listed on IDEAS
    3. Welteke, Clara & Geyer, Johannes & Haan, Peter, 2016. "Early retirement eligibility and employment behavior: evidence from a cohort based pension reform," Annual Conference 2016 (Augsburg): Demographic Change 145783, Verein für Socialpolitik / German Economic Association.
    4. Johannes Geyer & Clara Welteke, 2017. "Closing Routes to Retirement: How Do People Respond?," Discussion Papers of DIW Berlin 1653, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Retirement age; Pension reform; Labour supply; Actuarial deductions; Cohort-specific pension reform; Labour market effects;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:47:y:2017:i:c:p:216-231. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/labeco .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.