IDEAS home Printed from https://ideas.repec.org/p/lau/crdeep/04.04.html
   My bibliography  Save this paper

What Triggers Early Retirement ? Results from Swiss Pension Funds

Author

Listed:
  • Monika BÜTLER
  • Olivia HUGUENIN
  • Federica TEPPA

Abstract

Early retirement is predominantly considered as the result of incentives set by social security and the tax system. But people seem to retire early even in the absence of such distortions as the Swiss example demonstrates. We look for determinants of early retirement, in particular the role of lifetime income and family status, using individual data from a selection of Swiss pension funds. Our findings suggest that affordability is a key determinant in retirement decisions: More affuent men, and - to a much smaller extent - women, tend to leave the work force earlier. The fact that early retirement has become much more prevalent in the last 15 years is another indicator for the importance of affordability as Switzerland's funded pension system has matured over that period leading to higher effective replacement rates.

Suggested Citation

  • Monika BÜTLER & Olivia HUGUENIN & Federica TEPPA, 2004. "What Triggers Early Retirement ? Results from Swiss Pension Funds," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.04, Université de Lausanne, Faculté des HEC, DEEP.
  • Handle: RePEc:lau:crdeep:04.04
    as

    Download full text from publisher

    File URL: http://www.hec.unil.ch/deep/textes/04.04.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Butler, Monika & Ruesch, Martin, 2007. "Annuities in Switzerland," Policy Research Working Paper Series 4438, The World Bank.
    2. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-283, June.
    3. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July.
    4. Michael D. Hurd, 1990. "The Joint Retirement Decision of Husbands and Wives," NBER Chapters,in: Issues in the Economics of Aging, pages 231-258 National Bureau of Economic Research, Inc.
    5. repec:cup:etheor:v:13:y:1997:i:3:p:392-405 is not listed on IDEAS
    6. Bingley, Paul & Lanot, Gauthier, 2004. "Employer pay policies, public transfers and the retirement decisions of men and women in Denmark," European Economic Review, Elsevier, vol. 48(1), pages 181-200, February.
    7. Craig, Ben & Batina, Raymond G., 1991. "The effects of social security in a life cycle family labor supply simulation model," Journal of Public Economics, Elsevier, vol. 46(2), pages 199-226, November.
    8. Jerry A. Hausman & David A. Wise, 1985. "Social Security, Health Status, and Retirement," NBER Chapters,in: Pensions, Labor, and Individual Choice, pages 159-192 National Bureau of Economic Research, Inc.
    9. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    10. Zweimuller, Josef & Winter-Ebmer, Rudolf & Falkinger, Josef, 1996. "Retirement of spouses and social security reform," European Economic Review, Elsevier, vol. 40(2), pages 449-472, February.
    11. Jiménez-Martín, Sergi & Labeaga, José M. & Martínez-Granado, Maite, 1999. "Health status and retirement decisison for older european couples," UC3M Working papers. Economics 6170, Universidad Carlos III de Madrid. Departamento de Economía.
    12. Diamond, P. A. & Hausman, J. A., 1984. "Individual retirement and savings behavior," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 81-114.
    13. Monika Bütler & Federica Teppa, 2007. "The Choice between an Annuity and a Lump Sum: Results from Swiss Pension Funds," NBER Chapters,in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1944-1966 National Bureau of Economic Research, Inc.
    14. Samwick, Andrew A., 1998. "Discount rate heterogeneity and social security reform," Journal of Development Economics, Elsevier, pages 117-146.
    15. Samuelson, Paul A, 1975. "Optimum Social Security in a Life-Cycle Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 539-544, October.
    16. Stern, Steven, 1997. "Approximate Solutions to Stochastic Dynamic Programs," Econometric Theory, Cambridge University Press, vol. 13(03), pages 392-405, June.
    17. Burtless, Gary & Hausman, Jerry A, 1978. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiments," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1103-1130, December.
    18. Alan L. Gustman & Thomas L. Steinmeier, 1994. "Retirement in a Family Context: A Structural Model for Husbands and Wives," NBER Working Papers 4629, National Bureau of Economic Research, Inc.
    19. Mark Y. An & Bent Jesper Christensen & Nabanita Datta Gupta, 2004. "Multivariate mixed proportional hazard modelling of the joint retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 687-704.
    20. Laurence J. Kotlikoff, 1979. "Social Security and Equilibrium Capital Intensity," The Quarterly Journal of Economics, Oxford University Press, vol. 93(2), pages 233-253.
    21. Gary Burtless, 1986. "Social Security, Unanticipated Benefit Increases, and the Timing of Retirement," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 781-805.
    22. Nicole Maestas, 2004. "Back to Work: Expectations and Realizations of Work After Retirement," Working Papers wp085, University of Michigan, Michigan Retirement Research Center.
    23. Vincent P. Crawford & David M. Lilien, 1981. "Social Security and the Retirement Decision," The Quarterly Journal of Economics, Oxford University Press, vol. 96(3), pages 505-529.
    24. Queisser, Monika & Vittas, Dimitri, 2000. "The Swiss multi-pillar pension system : triumph of common sense?," Policy Research Working Paper Series 2416, The World Bank.
    25. 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.
    26. Jerry A. Hausman & David A. Wise, 1980. "Discontinuous Budget Constraints and Estimation: The Demand for Housing," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 75-96.
    27. Jonathan Gruber & David Wise, 1997. "Social Security Programs and Retirement Around the World: Introduction and Summary of Papers by..," NBER Working Papers 6134, National Bureau of Economic Research, Inc.
    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. Carmen Petrovici & Jörg Neugschwender, 2014. "Who can (still) afford to retire early? Cross-country comparison of incomes of senior workers and young retirees using LIS data for 2007 & 2010," LIS Working papers 608, LIS Cross-National Data Center in Luxembourg.
    2. David Dorn & Alfonso Sousa-Poza, 2010. "'Voluntary' and 'involuntary' early retirement: an international analysis," Applied Economics, Taylor & Francis Journals, vol. 42(4), pages 427-438.
    3. Hanel, Barbara & Riphahn, Regina T., 2006. "Financial Incentives and the Timing of Retirement: Evidence from Switzerland," IZA Discussion Papers 2492, Institute for the Study of Labor (IZA).
    4. Piekkola, Hannu & Deschryvere, Matthias, 2004. "Retirement Decisions and Option Values: Their Application Regarding Finland," Discussion Papers 951, The Research Institute of the Finnish Economy.
    5. Alejandra Cox Edwards & Estelle James, 2010. "Impact of Social Security Reform on Labor Force Participation Rates of Pensioners and Nonpensioners: Evidence from Chile," Journal of Human Capital, University of Chicago Press, vol. 4(2), pages 130-172.
    6. Nicolas Sirven & Thomas Barnay, 2017. "Expectations, loss aversion and retirement decisions in the context of the 2009 crisis in Europe," International Journal of Manpower, Emerald Group Publishing, vol. 38(1), pages 25-44, April.
    7. Piera Bello & Vincenzo Galasso, 2015. "Old Before their Time: The Role of Employers in Retirement Decisions," CESifo Working Paper Series 5667, CESifo Group Munich.
    8. Christian Keuschnigg & Mirela Keuschnigg & Christian Jaag, 2011. "Aging and the Financing of Social Security in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(II), pages 181-231, June.
    9. Estelle James & Alejandra Cox Edwards, 2005. "Do Individual Accounts Postpone Retirement: Evidence from Chile," Working Papers wp098, University of Michigan, Michigan Retirement Research Center.
    10. Bütler, Monika & Staubli, Stefan & Zito, Maria Grazia, 2008. "The Role of the Annuity's Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change," CEPR Discussion Papers 6930, C.E.P.R. Discussion Papers.
    11. Monika Riedel & Helmut Hofer, 2013. "Determinants of the Transition from Work into Retirement," NRN working papers 2013-10, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    12. Marjan, MAES, 2008. "Financial and redistributive impact of reforming the old-age pension system in Belgium," Discussion Papers (ECON - Département des Sciences Economiques) 2008040, Université catholique de Louvain, Département des Sciences Economiques.
    13. Daniel Hallberg & Matias Eklöf, 2010. "Do buy-outs of older workers matter?: Estimating retirement behavior with special early retirement offers," International Journal of Manpower, Emerald Group Publishing, vol. 31(3), pages 337-359, June.
    14. Justina A.V. Fischer & Alfonso Sousa-Poza, 2006. "The Institutional Determinants of Early Retirement in Europe," University of St. Gallen Department of Economics working paper series 2006 2006-08, Department of Economics, University of St. Gallen.

    More about this item

    Keywords

    occupational pension; retirement decision; duration models;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    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:lau:crdeep:04.04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gaëlle Sarda). General contact details of provider: http://edirc.repec.org/data/deelsch.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.