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Employer Compensation Policies, Public Transfer Programmes and Retirement Decisions

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  • Paul Bingley
  • Gauthier Lanot

Abstract

The empirical retirement literature measures individual responses to variation in income flows due to public transfers, private individual or employer-provided pensions. The novelty of this paper is to provide a decomposition the incentive effects from these three sources. It is the first time that the effects of pay policies of different employers on retirement outcomes is explicitly modelled and empirically measured.Amodel of individual retirement is set up where employers may influence worker retirement age through pay policy. A conventional dynamic structural model is extended to allow both individual and employer heterogeneity. Empirically, identification of the employer effects on income and retirement is achieved by exploiting a longitudinal sample of Danish small-to-medium sized private sector establishments matched together with all of their workers. Identification of the effect of public transfers on income and retirement is through exogenous eligibility rules and reforms to a public early retirement programme. Employer specific compensation is found to be an important determinant of work and retirement income flows. However, employer effects on retirement age are only found among subsamples where access to public transfers is relatively limited.

Suggested Citation

  • Paul Bingley & Gauthier Lanot, 1999. "Employer Compensation Policies, Public Transfer Programmes and Retirement Decisions," Keele Department of Economics Discussion Papers (1995-2001) 99/01, Department of Economics, Keele University, revised Jun 2000.
  • Handle: RePEc:kee:keeldp:99/01
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    File URL: http://www.keele.ac.uk/depts/ec/wpapers/9901.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Retirement; pensions; matched employer-employee panel data.;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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