IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/1565.html
   My bibliography  Save this paper

Job Loss and Retirement

Author

Listed:
  • Nassal, Lea

    (University of Warwick)

Abstract

This paper provides the first evidence of the long-term effects of job loss on age at retirement, pension benefits and lifetime income. Exploiting plant closures and using German administrative data, I compare displaced workers with similar non-displaced workers. I show that displaced workers delay their retirement in response to the shock and ineligibility for early pension claims is the main driver of this response. Despite adjustments in retirement behavior, displaced workers face significant losses in pension benefits and lifetime income. Compared to similar non-displaced workers, displaced workers experience losses in the present discounted value of their lifetime income of 25%.

Suggested Citation

  • Nassal, Lea, 2025. "Job Loss and Retirement," The Warwick Economics Research Paper Series (TWERPS) 1565, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1565
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2025/twerp_1565-_nassal.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dauth, Wolfgang & Eppelsheimer, Johann, 2020. "Preparing the sample of integrated labour market biographies (SIAB) for scientific analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54(1), pages 1-10.
    2. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    3. Johannes F. Schmieder & Till von Wachter & Jörg Heining, 2023. "The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany," American Economic Review, American Economic Association, vol. 113(5), pages 1208-1254, May.
    4. repec:bon:boncrc:crctr224_2023_481 is not listed on IDEAS
    5. Giesecke, Matthias & Kind, Michael, 2013. "Bridge Unemployment in Germany: Response in Labour Supply to an Increased Early Retirement Age," Ruhr Economic Papers 410, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 17(Nov), pages 2-20.
    7. García-Miralles, Esteban & Leganza, Jonathan M., 2024. "Joint retirement of couples: Evidence from discontinuities in Denmark," Journal of Public Economics, Elsevier, vol. 230(C).
    8. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
    9. Gregor Jarosch, 2023. "Searching for Job Security and the Consequences of Job Loss," Econometrica, Econometric Society, vol. 91(3), pages 903-942, May.
    10. repec:iab:iabjlr:v:54:i:1:p:art.10 is not listed on IDEAS
    11. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-437, October.
    12. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    13. Pedro Carneiro & Kjell Salvanes & Barton Willage & Alexander Willén, 2023. "Childhood Shocks Across Ages and Human Capital Formation," Working Papers 2023-018, Human Capital and Economic Opportunity Working Group.
    14. Wolfgang Dauth & Johann Eppelsheimer, 2020. "Preparing the sample of integrated labour market biographies (SIAB) for scientific analysis: a guide," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-14, December.
    15. 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.
    16. Iacus, Stefano M. & King, Gary & Porro, Giuseppe, 2012. "Causal Inference without Balance Checking: Coarsened Exact Matching," Political Analysis, Cambridge University Press, vol. 20(1), pages 1-24, January.
    17. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-188, January.
    18. Matthew Gudgeon & Pablo Guzman & Johannes F. Schmieder & Simon Trenkle & Han Ye, 2023. "When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies," NBER Working Papers 31807, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rud, Juan-Pablo & Simmons, Michael & Toews, Gerhard & Aragon, Fernando, 2024. "Job displacement costs of phasing out coal," Journal of Public Economics, Elsevier, vol. 236(C).
    2. Serdar Birinci & Youngmin Park & Kurt See, 2023. "The Heterogeneous Impacts of Job Displacement: Evidence from Canadian Job Separation Records," Staff Working Papers 23-55, Bank of Canada.
    3. Jose Garcia‐Louzao & Marta Silva, 2024. "Coworker networks and the labor market outcomes of displaced workers: Evidence from Portugal," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 63(3), pages 389-413, July.
    4. Emilia Del Bono & Andrea Weber & Rudolf Winter-Ebmer, 2012. "Clash Of Career And Family: Fertility Decisions After Job Displacement," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 659-683, August.
    5. Bíró, Anikó & Elek, Péter, 2020. "Job loss, disability insurance and health expenditure," Labour Economics, Elsevier, vol. 65(C).
    6. Ossi Korkeamäki & Jukka Appelqvist & Tomi Kyyrä, 2007. "Quantile Regression Estimates of the Earnings Losses of Displaced Workers," EcoMod2007 23900045, EcoMod.
    7. Kent Eliasson & Pär Hansson, 2016. "Are workers more vulnerable in tradable industries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 283-320, May.
    8. Hannah Illing & Johannes Schmieder & Simon Trenkle, 2024. "The Gender Gap in Earnings Losses After Job Displacement," Journal of the European Economic Association, European Economic Association, vol. 22(5), pages 2108-2147.
    9. Neffke, Frank & Nedelkoska, Ljubica & Wiederhold, Simon, 2024. "Skill mismatch and the costs of job displacement," Research Policy, Elsevier, vol. 53(2).
    10. Di Maio, Michele & Nisticò, Roberto, 2019. "The effect of parental job loss on child school dropout: Evidence from the Occupied Palestinian Territories," Journal of Development Economics, Elsevier, vol. 141(C).
    11. Maria Balgova & Hannah Illing, 2024. "The labour market costs of job displacement by migrant status," Bank of England working papers 1099, Bank of England.
    12. Antoine Bertheau & Edoardo Maria Acabbi & Cristina Barceló & Andreas Gulyas & Stefano Lombardi & Raffaele Saggio, 2023. "The Unequal Consequences of Job Loss across Countries," American Economic Review: Insights, American Economic Association, vol. 5(3), pages 393-408, September.
    13. repec:spo:wpmain:info:hdl:2441/3018m4nhj18vvr47bolsnnqeqs is not listed on IDEAS
    14. repec:hal:spmain:info:hdl:2441/3018m4nhj18vvr47bolsnnqeqs is not listed on IDEAS
    15. Simone Balestra & Uschi Backes-Gellner, 2017. "When a Door Closes, a Window Opens? Long-Term Labor Market Effects of Involuntary Separations," German Economic Review, Verein für Socialpolitik, vol. 18(1), pages 1-21, February.
    16. Nikolay Angelov & Marcus Eliason, 2016. "The Differential Earnings and Income Effects of Involuntary Job Loss on Workers with Disabilities — Evidence from Sweden," LABOUR, CEIS, vol. 30(2), pages 213-233, June.
    17. Henry Ohlsson & Donald Storrie, 2012. "Long‐term effects of public policy for displaced workers in Sweden," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(5), pages 514-538, August.
    18. Bloemen, Hans & Hochguertel, Stefan & Zweerink, Jochem, 2018. "Job loss, firm-level heterogeneity and mortality: Evidence from administrative data," Journal of Health Economics, Elsevier, vol. 59(C), pages 78-90.
    19. Inés Hardoy & Pål Schøne, 2014. "Displacement and household adaptation: insured by the spouse or the state?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 683-703, July.
    20. Kristiina Huttunen & Jenni Kellokumpu, 2016. "The Effect of Job Displacement on Couples' Fertility Decisions," Journal of Labor Economics, University of Chicago Press, vol. 34(2), pages 403-442.
    21. Castro, Rui & Lange, Fabian & Poschke, Markus, 2024. "Labour force transitions," CLEF Working Paper Series 78, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    22. Mattia Filomena, 2021. "Unemployment Scarring Effects: A Symposium On Empirical Literature," Working Papers 453, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    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:wrk:warwec:1565. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Margaret Nash (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.