The Impact of Age Pension Eligibility Age on Retirement and Program Dependence: Evidence from an Australian Experiment
Identifying the effect of the financial incentives created by social security systems on the retirement behaviour of individuals requires exogenous variation in program parameters. In this paper we study the 1993 Australian Age Pension reform which increased the eligibility age for women to access the social security benefit. We find economically significant responses to the increase in the Age Pension eligibility age. An increase in the eligibility age of 1 year induced a decline in retirement probability by approximately 10 percent. In addition, we find that the social security reform induced significant "program substitution." The rise in the Age Pension eligibility age had an unintended consequence of increasing enrolment in other social insurance programs, particularly the Disability Support Pension, which functioned as an alternative source for funding retirement.
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- 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.
- 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)