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Shattered Dreams: The Effects of Changing the Pension System Late in the Game

Author

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  • de Grip, Andries

    () (ROA, Maastricht University)

  • Lindeboom, Maarten

    () (Vrije Universiteit Amsterdam)

  • Montizaan, Raymond

    () (ROA, Maastricht University)

Abstract

This paper assesses the impact of a dramatic reform of the Dutch pension system on mental health, savings behavior and retirement expectations of workers nearing retirement age. The reform means that public sector workers born on January 1, 1950 or later face a substantial reduction in their pension rights while workers born before this threshold date may still retire under the old, more generous rules. We employ a unique matched survey and administrative data set comprising male public sector workers born in 1949 and 1950 and find strong ex ante effects on mental health for workers who are affected by the reform. This effect increases as birth dates approach the threshold date. Furthermore, the effects differ in accordance with worker characteristics. Finally, we find that the response of those affected by the reform is to work longer and to save more.

Suggested Citation

  • de Grip, Andries & Lindeboom, Maarten & Montizaan, Raymond, 2009. "Shattered Dreams: The Effects of Changing the Pension System Late in the Game," IZA Discussion Papers 4034, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4034
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    More about this item

    Keywords

    causal effect; pension reform; mental health; retirement;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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