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Estimating retirement behavior with special early retirement offers

Author

Listed:
  • Eklöf, Matias

    (Department of Economics)

  • Hallberg, Daniel

    (Department of Economics)

Abstract

We model retirement behavior in Sweden during the 1990ies with focus on voluntary early retirement where there is an option for “buy-outs”. An employer can offer the employees generous pension programs if the employee agrees on early retirement. Earlier studies have neglected such offers, but in doing so, estimates of the individuals’ responses to financial incentives in a retirement decision are likely to be biased upward. We propose an estimation strategy where the retirement decision and the accesses to early retirement pension offers are estimated in a simultaneous equation system, yielding unbiased estimates of the model parameters. We apply the model using detailed Swedish register data. Our results indicate that the marginal effects in retirement probability w.r.t. a change in financial incentives is less pronounced if early retirement pensions are accounted for. Further, we illustrate that the early retirement probabilities would decrease by 10-30 percent if early retirement pension offers were absent.

Suggested Citation

  • Eklöf, Matias & Hallberg, Daniel, 2006. "Estimating retirement behavior with special early retirement offers," Working Paper Series 2006:13, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2006_013
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    Citations

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    Cited by:

    1. Daniel Hallberg, 2011. "Economic Fluctuations and Retirement of Older Employees," LABOUR, CEIS, vol. 25(3), pages 287-307, September.
    2. F. J. Fernández-Díaz & C. Patxot & G. Souto, 2013. "DYPES: A Microsimulation model for the Spanish retirement pension system," Working Papers 2013-06, FEDEA.
    3. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
    4. Anders Stenberg & Xavier Luna & Olle Westerlund, 2012. "Can adult education delay retirement from the labour market?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 677-696, January.
    5. Vincent Touzé, 2008. "Marché du travail et emploi des seniors en Suède," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(2), pages 55-85.
    6. Marjan, MAES, 2008. "Does the dismantlement of early retirement schemes increase unemployment in Belgium ?," Discussion Papers (ECON - Département des Sciences Economiques) 2008041, Université catholique de Louvain, Département des Sciences Economiques.
    7. Palmer, Edward, 2008. "The market for retirement products in Sweden," Policy Research Working Paper Series 4748, The World Bank.
    8. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2010. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 1-27, May.
    9. repec:hal:spmain:info:hdl:2441/6410 is not listed on IDEAS
    10. repec:spo:wpmain:info:hdl:2441/6410 is not listed on IDEAS
    11. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.

    More about this item

    Keywords

    Retirement; early retirement pension; golden handshakes; occupational pension; demand for old workers;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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