IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp10014.html
   My bibliography  Save this paper

Impacts from Delaying Access to Retirement Benefits on Welfare Receipt and Expenditure: Evidence from a Natural Experiment

Author

Listed:
  • Oguzoglu, Umut

    (University of Manitoba)

  • Polidano, Cain

    (Melbourne Institute of Applied Economic and Social Research)

  • Vu, Ha

    (Deakin University)

Abstract

Governments are responding to fiscal pressures associated with aging populations by increasing the eligibility age for publicly-funded retirement benefits. However, recent studies show large resulting increases in the receipt of alternative payments, which raises concern that welfare savings are offset by increased inflows into alternative payments. Using administrative data to examine the impacts of female eligibility age increases in Australia, we find little evidence of this. Instead, most of the increase in receipt is because the delay mechanically extends the receipt time of people already on alternative payments. The implication is that fiscal savings are not being jeopardized by opportunistic behaviour.

Suggested Citation

  • Oguzoglu, Umut & Polidano, Cain & Vu, Ha, 2016. "Impacts from Delaying Access to Retirement Benefits on Welfare Receipt and Expenditure: Evidence from a Natural Experiment," IZA Discussion Papers 10014, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10014
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp10014.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Courtney Coile & Jonathan Gruber, 2001. "Social Security Incentives for Retirement," NBER Chapters, in: Themes in the Economics of Aging, pages 311-354, National Bureau of Economic Research, Inc.
    2. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1.
    3. Duncan McVicar & Roger Wilkins, 2013. "Explaining the Growth in the Number of Recipients of the Disability Support Pension in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(3), pages 345-356, September.
    4. Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2009. "The Under-Reporting of Transfers in Household Surveys: Its Nature and Consequences," NBER Working Papers 15181, National Bureau of Economic Research, Inc.
    5. Donna B. Gilleskie & David M. Blau, 2006. "Health insurance and retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 935-953.
    6. Mastrobuoni, Giovanni, 2009. "Labor supply effects of the recent social security benefit cuts: Empirical estimates using cohort discontinuities," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1224-1233, December.
    7. Hanel, Barbara & Riphahn, Regina T., 2012. "The timing of retirement — New evidence from Swiss female workers," Labour Economics, Elsevier, vol. 19(5), pages 718-728.
    8. Xiaoyan Li & Nicole Maestas, 2008. "Does the Rise in the Full Retirement Age Encourage Disability Benefits Applications? Evidence from the Health and Retirement Study," Working Papers wp198, University of Michigan, Michigan Retirement Research Center.
    9. Bateman, Hazel & Piggott, John, 2001. "The Australian Approach to Retirement Income Provision," Discussion Paper 11, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    10. Kerstin Bruckmeier & Gerrit M�ller & Regina T. Riphahn, 2014. "Who misreports welfare receipt in surveys?," Applied Economics Letters, Taylor & Francis Journals, vol. 21(12), pages 812-816, August.
    11. Staubli, Stefan & Zweimüller, Josef, 2013. "Does raising the early retirement age increase employment of older workers?," Journal of Public Economics, Elsevier, vol. 108(C), pages 17-32.
    12. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    13. Kadir Atalay & Garry F. Barrett, 2015. "The Impact of Age Pension Eligibility Age on Retirement and Program Dependence: Evidence from an Australian Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 71-87, March.
    14. Norma B. Coe & Kelly Haverstick, 2010. "Measuring the Spillover to Disability Insurance Due to the Rise in the Full Retirement Age," Working Papers, Center for Retirement Research at Boston College wp2010-20, Center for Retirement Research, revised Dec 2010.
    15. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-545, July.
    16. Duggan, Mark & Singleton, Perry & Song, Jae, 2007. "Aching to retire? The rise in the full retirement age and its impact on the social security disability rolls," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1327-1350, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Todd Morris, 2022. "Re-examining female labor supply responses to the 1994 Australian pension reform," Review of Economics of the Household, Springer, vol. 20(2), pages 419-445, June.
    2. Manuel Serrano‐Alarcón & Chiara Ardito & Roberto Leombruni & Alexander Kentikelenis & Angelo d’Errico & Anna Odone & Giuseppe Costa & David Stuckler & IWGRH, 2023. "Health and labor market effects of an unanticipated rise in retirement age. Evidence from the 2012 Italian pension reform," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2745-2767, December.
    3. Zwick, Thomas & Bruns, Mona & Geyer, Johannes & Lorenz, Svenja, 2022. "Early retirement of employees in demanding jobs: Evidence from a German pension reform," The Journal of the Economics of Ageing, Elsevier, vol. 22(C).
    4. Todd Morris, 2022. "The unequal burden of retirement reform: Evidence from Australia," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 592-619, April.
    5. Riphahn, Regina T. & Schrader, Rebecca, 2023. "Reforms of an early retirement pathway in Germany and their labor market effects," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(3), pages 304-330, July.
    6. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2020. "Labor Market and Distributional Effects of an Increase in the Retirement Age," Labour Economics, Elsevier, vol. 65(C).
    7. Welteke, Clara & Geyer, Johannes & Haan, Peter, 2016. "Early retirement eligibility and employment behavior: evidence from a cohort based pension reform," VfS Annual Conference 2016 (Augsburg): Demographic Change 145783, Verein für Socialpolitik / German Economic Association.
    8. Andrew E Clark & Rong Zhu, 2024. "Taking Back Control? Quasi-Experimental Evidence on the Impact of Retirement on Locus of Control," The Economic Journal, Royal Economic Society, vol. 134(660), pages 1465-1493.
    9. Mohamed Ebeid & Umut Oguzoglu, 2023. "Short‐term effect of retirement on health: Evidence from nonparametric fuzzy regression discontinuity design," Health Economics, John Wiley & Sons, Ltd., vol. 32(6), pages 1323-1343, June.
    10. Elisa Birch & Alison Preston, 2021. "Women, COVID-19 and Superannuation," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 24(2), pages 175-198.
    11. Nguyen, Ha Trong & Mitrou, Francis & Zubrick, Stephen R., 2024. "Retirement, housing mobility, downsizing and neighbourhood quality - A causal investigation," Journal of Housing Economics, Elsevier, vol. 63(C).
    12. Nguyen, Ha Trong & Mitrou, Francis & Taylor, Catherine L. & Zubrick, Stephen R., 2020. "Does retirement lead to life satisfaction? Causal evidence from fixed effect instrumental variable models," GLO Discussion Paper Series 536, Global Labor Organization (GLO).
    13. Ardito Chiara, 2021. "The unequal impact of raising the retirement age: Employment response and program substitution," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-37, January.
    14. Johannes Geyer & Clara Welteke, 2017. "Closing Routes to Retirement: How Do People Respond?," Discussion Papers of DIW Berlin 1653, DIW Berlin, German Institute for Economic Research.
    15. Zhu, Rong & Onur, Ilke, 2023. "Does retirement (really) increase informal caregiving? Quasi-experimental evidence from Australia," Journal of Health Economics, Elsevier, vol. 87(C).
    16. Bocong Yuan & Jiachun Fang & Jiannan Li & Fei Peng, 2022. "Chronic patients as retirement-aged workers: the impact of employment-based health insurance and chronic conditions on health-related working capacity and late-life career participation," European Journal of Ageing, Springer, vol. 19(4), pages 1351-1362, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    2. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2020. "Labor Market and Distributional Effects of an Increase in the Retirement Age," Labour Economics, Elsevier, vol. 65(C).
    3. Barbara Engels & Johannes Geyer & Peter Haan, 2016. "Pension Incentives and Early Retirement," Discussion Papers of DIW Berlin 1617, DIW Berlin, German Institute for Economic Research.
    4. Engels, Barbara & Geyer, Johannes & Haan, Peter, 2017. "Pension incentives and early retirement," Labour Economics, Elsevier, vol. 47(C), pages 216-231.
    5. Johannes Geyer & Clara Welteke, 2017. "Closing Routes to Retirement: How Do People Respond?," Discussion Papers of DIW Berlin 1653, DIW Berlin, German Institute for Economic Research.
    6. Todd Morris, 2022. "The unequal burden of retirement reform: Evidence from Australia," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 592-619, April.
    7. Welteke, Clara & Geyer, Johannes & Haan, Peter, 2016. "Early retirement eligibility and employment behavior: evidence from a cohort based pension reform," VfS Annual Conference 2016 (Augsburg): Demographic Change 145783, Verein für Socialpolitik / German Economic Association.
    8. Kadir Atalay & Garry F. Barrett & Peter Siminski, 2019. "Pension incentives and the joint retirement of couples: evidence from two natural experiments," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 735-767, July.
    9. Ye, Han, 2018. "The Effect of Pension Subsidies on Retirement Timing of Older Women: Evidence from a Regression Kink Design," IZA Discussion Papers 11831, Institute of Labor Economics (IZA).
    10. Leinonen, Taina & Laaksonen, Mikko & Chandola, Tarani & Martikainen, Pekka, 2016. "Health as a predictor of early retirement before and after introduction of a flexible statutory pension age in Finland," Social Science & Medicine, Elsevier, vol. 158(C), pages 149-157.
    11. Freudenberg, Christoph & Laub, Natalie & Sutor, Tim, 2018. "Pension decrement rates across Europe – Are they too low?," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 35-45.
    12. Riphahn, Regina T. & Schrader, Rebecca, 2023. "Reforms of an early retirement pathway in Germany and their labor market effects," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(3), pages 304-330, July.
    13. Cristiano Antonelli, 2017. "The Engines of the Creative Response: Reactivity and Knowledge Governance," Economía: teoría y práctica, Universidad Autónoma Metropolitana, México, vol. 47(2), pages 9-30, Julio-Dic.
    14. Songül Tolan, 2017. "The Effect of Partial Retirement on Labor Supply, Public Balances and the Income Distribution: Evidence from a Structural Analysis," Discussion Papers of DIW Berlin 1679, DIW Berlin, German Institute for Economic Research.
    15. Chiara Ardito, 2017. "Rising pension age in Italy: Employment response and Program substitution," LABORatorio R. Revelli Working Papers Series 155, LABORatorio R. Revelli, Centre for Employment Studies.
    16. Michaud, P.C. & Vermeulen, F.M.P., 2004. "A Collective Retirement Model : Identification and Estimation in the Presence of Externalities," Other publications TiSEM fb0bfe30-b1e3-4b61-9bf2-1, Tilburg University, School of Economics and Management.
    17. Cribb, Jonathan & Emmerson, Carl & Tetlow, Gemma, 2016. "Signals matter? Large retirement responses to limited financial incentives," Labour Economics, Elsevier, vol. 42(C), pages 203-212.
    18. Atalay, Kadir & Barrett, Garry F., 2016. "Pension Incentives and the Retirement Decisions of Couples," IZA Discussion Papers 10013, Institute of Labor Economics (IZA).
    19. Hanel, Barbara & Riphahn, Regina T., 2012. "The timing of retirement — New evidence from Swiss female workers," Labour Economics, Elsevier, vol. 19(5), pages 718-728.
    20. Octave Brouwer & Ilan Tojerow, 2024. "Old-age unemployment and labour supply: an application to Belgium," Empirical Economics, Springer, vol. 67(1), pages 253-287, July.

    More about this item

    Keywords

    retirement; welfare substitution; aging population;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp10014. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.