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Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis

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Listed:
  • Elsayed A.E.A.
  • Grip A. de
  • Fouarge D.
  • Montizaan R.M.

    (GSBE)

Abstract

Using data from a stated preferences experiment in the Netherlands, we find that replacing full-time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average. Total life-time labour supply, however, decreases with 3.4 months because the positive effect of delayed retirement on labour supply is cancelled out by the reduction in working hours before full retirement. The impact of gradual retirement schemes is, however, heterogeneous across groups of workers. Workers with non-routine job tasks retire at a later age when they can gradually retire. Financial incentives, either in terms of changing pension income or the price of leisure, also affect the expected retirement age, but the impact of these financial incentives does not differ with the possibility of gradual retirement. Finally, we find that gradual retirement is not a preferred option among workers as the large majority still prefers full retirement. This especially holds for workers with a lower wage and those with higher life expectancy.

Suggested Citation

  • Elsayed A.E.A. & Grip A. de & Fouarge D. & Montizaan R.M., 2015. "Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis," Research Memorandum 030, Maastricht University, Graduate School of Business and Economics (GSBE).
  • Handle: RePEc:unm:umagsb:2015030
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    References listed on IDEAS

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    Cited by:

    1. Andrea Albanese & Bart Cockx & Yannick Thuy, 2015. "Working Time Reductions at the End of the Career. Do they prolong the Time Spent in Employment?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2015024, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Songül Tolan, 2017. "The Effect of Partial Retirement on Labor Supply, Public Balances and the Income Distribution: Evidence from a Structural Analysis," Discussion Papers of DIW Berlin 1679, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; Retirement; Retirement Policies;

    JEL classification:

    • 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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