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Working Paper 14-12 - Analysing the impact of eligibility and financial measures aiming at delaying early retirement in Belgium: a “difference-in-differences” approach using panel data


  • Maritza López-Novella


Belgium is characterised by one of the lowest employment rates of elderly workers in the European Union. Since 1997, attempts have been made to discourage elderly workers from leaving the labour market before the age of 65. In particular, two measures aimed at reducing early retirement have been introduced. The first extends the number of career years required to enter early retirement. The second, called “pension bonus”, financially stimulates elderly workers to pursue employment after the age of 62. This paper provides an ex-post evaluation of the impact of these two measures on the probability of remaining employed a year later using a difference-in-differences strategy. Our data consists of individual longitudinal employment data covering the period 2000-2009. Using panel data logit models, we find first that the extension of the career length requirement had a significant impact on the probability of staying employed a year later for blue collar and low income white collar male workers aged 60-61 compared to those aged 62-64 during the period 2000-2006. Our second exercise proceeds to estimate the impact of the “pension bonus” during the period 2004-2009, in the presence of the extension of the career length requirement. Comparing the two exercises allows us to conclude that the “pension bonus” had, if any, a very limited impact on the probability of staying employed a year later for male workers aged 62-64 compared to those aged 60-61.

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  • Maritza López-Novella, 2012. "Working Paper 14-12 - Analysing the impact of eligibility and financial measures aiming at delaying early retirement in Belgium: a “difference-in-differences” approach using panel data," Working Papers 1214, Federal Planning Bureau, Belgium.
  • Handle: RePEc:fpb:wpaper:1214

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    References listed on IDEAS

    1. Marjan Maes, 2010. "Le bonus de pension : un cadeau empoisonné," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 79, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    3. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-437, October.
    4. Gruber, Jonathan & Orszag, Peter, 2003. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," National Tax Journal, National Tax Association, vol. 56(4), pages 755-773, December.
    5. Romain Duval, 2003. "The Retirement Effects of Old-Age Pension and Early Retirement Schemes in OECD Countries," OECD Economics Department Working Papers 370, OECD Publishing.
    6. Jonathan F. Pingle, 2006. "Social Security's delayed retirement credit and the labor supply of older men," Finance and Economics Discussion Series 2006-37, Board of Governors of the Federal Reserve System (U.S.).
    7. Joyce Manchester & Jae Song, 2008. "Have People Delayed Claiming Retirement Benefits? Responses to Changes in Social Security Rules: Working Paper 2008-04," Working Papers 19575, Congressional Budget Office.
    8. Mathieu Lefebvre & Kristian Orsini, 2012. "A structural model for early exit of older men in Belgium," Empirical Economics, Springer, vol. 43(1), pages 379-398, August.
    9. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    10. Steven J. Haider & David S. Loughran, 2008. "The Effect of the Social Security Earnings Test on Male Labor Supply: New Evidence from Survey and Administrative Data," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
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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
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models


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