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The Role of Labor Demand in the Labor Market Effects of a Pension Reform

Author

Listed:
  • Johannes Geyer
  • Peter Haan
  • Svenja Lorenz
  • Mona Pfister
  • Thomas Zwick

Abstract

This paper shows that labor demand plays an important role in the labor market reactions of older women affected by pension deductions for early retirement. Based on a large representative sample of the German workforce (SIAB), we calculate the consequences of individual financial incentive changes caused by a pension reform in Germany on employment, unemployment, and partial retirement. The reform reduces financial incentives for early retirement. In line with labor demand theory, we show that employers with a high share of older worker inflow compared with the share of younger worker inflow, employers in sectors with a high share of collective bargaining agreements, and employers in sectors with few investments in research and development are more responsive to their employees´ demand to stay longer in the labor market. These employer groups mainly offer their older employees the option of staying longer in partial retirement instead of forcing them into unemployment before retirement.

Suggested Citation

  • Johannes Geyer & Peter Haan & Svenja Lorenz & Mona Pfister & Thomas Zwick, 2019. "The Role of Labor Demand in the Labor Market Effects of a Pension Reform," Discussion Papers of DIW Berlin 1827, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1827
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.696461.de/dp1827.pdf
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    Citations

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    Cited by:

    1. Lorenz, Svenja & Zwick, Thomas & Bruns, Mona, 2022. "Beware of the employer: Financial incentives for employees may fail to prolong old-age employment," The Journal of the Economics of Ageing, Elsevier, vol. 21(C).
    2. Lorenz, Svenja & Zwick, Thomas, 2020. "Money also is sunny in a retiree's world," ZEW Discussion Papers 20-056, ZEW - Leibniz Centre for European Economic Research.
    3. 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 1-21.

    More about this item

    Keywords

    pension reform; labor demand effects; early retirement; employer heterogeneity;
    All these keywords.

    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
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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