Retirement: Does Individual Unemployment Matter? Evidence from Danish Panel Data 1980-2009

26 Pages Posted: 12 May 2012

See all articles by Trine Filges

Trine Filges

Danish National Institute of Social Research (SFI)

Mona Larsen

Danish National Centre for Social Research (SFI)

Peder J. Pedersen

Department of Economics Aarhus University ; IZA Institute of Labor Economics

Abstract

The paper studies the impact from variations in unemployment on retirement among older workers. We integrate unemployment variations with early retirement programs and other pathways out of the labor force. The paper describes retirement programs, policy changes, labor force participation among older workers and presents a new estimate of the trend in the average age of retirement. Individual panel data for the last 25 years are used in estimations of the impact from individual unemployment on the retirement decision. Unemployment is found highly significant and quantitatively important for the retirement decision. We conclude that there is a clear risk of a cyclical downturn resulting in a more long run reduction in productive capacity with negative consequences for the budget of the public sector.

Keywords: unemployment, labor force participation, retirement

JEL Classification: E32, J21, J26, J64

Suggested Citation

Filges, Trine and Larsen, Mona and Pedersen, Peder J., Retirement: Does Individual Unemployment Matter? Evidence from Danish Panel Data 1980-2009. IZA Discussion Paper No. 6538, Available at SSRN: https://ssrn.com/abstract=2056728 or http://dx.doi.org/10.2139/ssrn.2056728

Trine Filges (Contact Author)

Danish National Institute of Social Research (SFI) ( email )

Herluf Trolles Gade 11
DK-1052 Kopenhagen
Denmark

Mona Larsen

Danish National Centre for Social Research (SFI) ( email )

Herluf Trolles Gade 11
DK-1052 Copenhagen
Denmark

Peder J. Pedersen

Department of Economics Aarhus University ( email )

DK-8000 Aarhus
Denmark
+45 8942 1581 (Phone)
+45 8613 6334 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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