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The Impact of Social Security on Pension Claiming and Retirement: Active vs. Passive Decisions

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  • Rafael Lalive
  • Arvind Magesan
  • Stefan Staubli

Abstract

We exploit a unique Swiss reform to identify the importance of passivity, claiming social security benefits at the Full Retirement Age (FRA). Sharp discontinuities generated by the reform reveal that raising the FRA while imposing small early claiming penalties significantly delays pension claiming and retirement, but imposing large penalties and holding the FRA fixed does not. The nature of the reform allows us to identify that between 47 and 69% of individuals are passive, while imposing additional structure point identifies the fraction at 67%. An original survey of Swiss pensioners reveals that reference-dependent preferences is the main source of passivity.

Suggested Citation

  • Rafael Lalive & Arvind Magesan & Stefan Staubli, 2020. "The Impact of Social Security on Pension Claiming and Retirement: Active vs. Passive Decisions," NBER Working Papers 27616, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27616
    Note: AG LS PE
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    Cited by:

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    2. Soeren Leth-Petersen & Andrew Caplin & Eungik Lee & Johan Saeverud, 2022. "Communicating Social Security Reform," CEBI working paper series 22-19, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    3. Regina T. Riphahn & Rebecca Schrader, 2020. "Labor market effects of early retirement reforms," Working Papers 199, Bavarian Graduate Program in Economics (BGPE).
    4. Francesca Carta & Marta De Philippis, 2021. "Working horizon and labour supply: the effect of raising the full retirement age on middle-aged individuals," Temi di discussione (Economic working papers) 1314, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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