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Financial Incentives in the Austrian PAYG-Pension System: Micro-Estimation

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  • Roman Rabb

    (ICSG - Irish Centre for Social Gerontology, Department of Economics, National University of Ireland Galway)

Abstract

The scope of this paper is to investigate the impact of financial incentives on the retirement decision of private sector workers in Austria. How do financial incentives embedded in the Austrian pension system impact individual retirement behavior? We are using a unique data set of individual social insurance spells. Micro-estimating the impact of financial incentives on the probability of retirement shows that the behavioral response to financial incentives in Austria is relatively large in international comparison. Also, there are striking behavioral differences between men and women. Using the estimates to simulate the response to reform shows that actual retirement ages could be most successfully brought up by a 6 percentage point deduction in pension benefits per year of early retirement.

Suggested Citation

  • Roman Rabb, 2009. "Financial Incentives in the Austrian PAYG-Pension System: Micro-Estimation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0902, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0902
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    References listed on IDEAS

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    1. Axel Börsch-Supan & Reinhold Schnabel & Simone Kohnz & Giovanni Mastrobuoni, 2004. "Micro-Modeling of Retirement Decisions in Germany," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 285-344, National Bureau of Economic Research, Inc.
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    5. Mårten Palme & Ingemar Svensson, 2004. "Income Security Programs and Retirement in Sweden," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 579-642, National Bureau of Economic Research, Inc.
    6. Helmut Hofer & Reinhard Koman, 2006. "Social security and retirement incentives in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(5), pages 285-313, December.
    7. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    8. Markus Knell & Walpurga Köhler-Töglhofer & Doris Prammer, 2006. "The Austrian Pension System – How Recent Reforms Have Changed Fiscal Sustainability and Pension Benefits," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 69-93.
    9. Zweimuller, Josef & Winter-Ebmer, Rudolf & Falkinger, Josef, 1996. "Retirement of spouses and social security reform," European Economic Review, Elsevier, vol. 40(2), pages 449-472, February.
    10. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
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    Cited by:

    1. Amitrajeet A. Batabyal & Peter Nijkamp, 2018. "On pessimism and optimism by forward looking agents and the need for pensions," Asia-Pacific Journal of Regional Science, Springer, vol. 2(1), pages 1-14, April.
    2. Christine Mayrhuber & Gerhard Rünstler & Thomas Url & Werner Eichhorst & Michael J. Kendzia & Maarten Gerard & Connie Nielsen, 2011. "Pension Systems in the EU. Contingent Liabilities and Assets in the Public and Private Sector," WIFO Studies, WIFO, number 43938, June.
    3. Christine Mayrhuber & Hedwig Lutz & Ingrid Mairhuber, 2021. "Erwerbsaustritt, Pensionsantritt und Anhebung des Frauenpensionsantrittsalters ab 2024. Potentielle Auswirkungen auf Frauen, Branchen und Betriebe," WIFO Studies, WIFO, number 67348, June.
    4. Christine Mayrhuber & Silvia Rocha-Akis, 2013. "Anreizsysteme zur Weiterbeschäftigung älterer Arbeitnehmerinnen und Arbeitnehmer," WIFO Studies, WIFO, number 46905, June.
    5. Batabyal, Amitrajeet & Nijkamp, Peter, 2016. "On Pessimism and Optimism by Forward Looking Agents and the Need for Social Security," MPRA Paper 75965, University Library of Munich, Germany, revised 03 Jan 2017.
    6. Isilda Mara & Edlira Narazani, 2011. "Labour-incentive reforms at preretirement age in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(4), pages 481-510, November.
    7. Serguei Kaniovski & Thomas Url & Helmut Hofer & Sandra Müllbacher, 2014. "A Long-run Macroeconomic Model of the Austrian Economy (A-LMM). New Results (2014)," WIFO Studies, WIFO, number 47254, June.
    8. Serguei Kaniovski & Thomas Url & Helmut Hofer & Sandra Müllbacher, 2013. "A Long-run Macroeconomic Model of the Austrian Economy (A-LMM). New Results," WIFO Studies, WIFO, number 46830, June.
    9. Thomas Horvath & Thomas Url, 2013. "Bridging-Renten als Überbrückung für Einkommensausfälle vor dem Pensionsantritt," WIFO Studies, WIFO, number 46684, June.

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    More about this item

    Keywords

    Models with Panel Data; Discrete Regression and Qualitative Choice Models; Social Security and Public Pensions; Time Allocation and Labor Supply; Retirement; Retirement Policies.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • 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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