Impact of Early Retirement Incentives on Labour Market Participation: Evidence from a Parametric Change in the Czech Republic
We investigate the impact of a change in the Czech early retirement scheme on the labor force participation of older male workers. Using the difference-in-differences method we find that a reduction in early retirement benefits by 2â€“3% leads to approximately the same decrease in the probability of being inactive. Our finding implies high elasticity of older male workersâ€™ participation rate. The public policy implication is that a reduction in early retirement benefits can serve as a very effective tool to increase the participation of older men in the Czech labor market.
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