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Money also is sunny in a retiree’s world: financial incentives and work after retirement

Author

Listed:
  • Lorenz, Svenja

    (Univ. Würzburg)

  • Zwick, Thomas

    (Univ. Würzburg ; ZEW ; Univ. Maastricht)

Abstract

"This paper assesses the impact of financial incentives on working after retirement. The empirical analysis is based on a large administrative individual career data set that includes information about 2% of all German employees subject to social security or in marginal employment until age 67 and their employers in the period 1975–2014. We use the classical labor supply model and differentiate between the impact of (potential) labor and non-labor (pension entitlements) income. A Heckman-type two step selection model corrects for endogeneity. We show that labor income has a positive and non-labor income a negative impact on the decision to work after retirement. Especially individuals who can substantially increase their earnings in comparison to their pension entitlements accordingly have a higher probability to work. Men are more attracted by labor earnings incentives than women. Also individuals who work until retirement are easier attracted to work after retirement by higher labor income than those with gaps between employment exit and retirement. Our results allow the calculation of the impact of changes in taxes on labor and non-labor income and changes in earnings offers by employers on work after retirement for different demographic groups." (Author's abstract, © 2021 Springer) ((en))

Suggested Citation

  • Lorenz, Svenja & Zwick, Thomas, 2021. "Money also is sunny in a retiree’s world: financial incentives and work after retirement," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 55, pages 1-021.
    • Handle: RePEc:iab:iabjlr:v:55:i::p:a021
    DOI: 10.1186/s12651-021-00304-1
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    Cited by:

    1. Zwick, Thomas & Bruns, Mona & Geyer, Johannes & Lorenz, Svenja, 2022. "Early retirement of employees in demanding jobs: Evidence from a German pension reform," The Journal of the Economics of Ageing, Elsevier, vol. 22(C).
    2. Criscent Birungi & Cody Hyndman, 2026. "Habit Formation, Labor Supply, and the Dynamics of Retirement and Annuitization," Papers 2602.02816, arXiv.org, revised Feb 2026.
    3. Sturm, Patrick, 2025. "Workplace peer effects in retirement," W.E.P. - Würzburg Economic Papers 112, University of Würzburg, Department of Economics.
    4. Xiang Gao & Cody Hyndman & Traian A. Pirvu & Petar Jevti'c, 2022. "Optimal annuitization post-retirement with labor income," Papers 2202.04220, arXiv.org.
    5. Criscent Birungi & Cody Hyndman, 2025. "Optimal annuitization with labor income under age-dependent force of mortality," Papers 2510.10371, arXiv.org.
    6. Boockmann, Bernhard & Reiner, Marcel & Schafstädt, Christin & Scheu, Tobias & Setzepfand, Paul, 2024. "Arbeitskräftepotenziale in Deutschland besser ausschöpfen: 60 Handlungsempfehlungen für Verwaltung, Politik und Praxis," Studien, Stiftung Familienunternehmen / Foundation for Family Businesses, number 305211.

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    Keywords

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    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • 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

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