Financial Incentives and Heterogeneity in Retirement Behavior An Empirical Analysis Based on SHARE-RV Data

33 Pages Posted: 23 Dec 2020 Last revised: 22 Feb 2021

See all articles by Nicolas Goll

Nicolas Goll

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Felizia Hanemann

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Date Written: December 21, 2020

Abstract

English Abstract: Over the past few decades, different reforms have come into force, which aim at keeping older workers in the labor market longer. Broad literature to date has investigated reform effects for the average worker. Evidence on the heterogeneous reform effects on different groups is to date however relatively sparse. We therefore evaluate the 1992 pension reform in Germany, which gradually introduced actuarial deductions for early retirement between 1997 and 2004. We investigate whether individuals with physically demanding jobs at the end of their working career responded differently to the introduction of actuarial deductions in comparison to individuals with physically non-demanding jobs later in life. The gradual introduction of actuarial adjustments offers exogenous cohort-specific variation for the identification of the causal effect of financial incentives on the retirement decision. We estimate Cox proportional hazard models using SHARE-RV data, which offer a direct linkage of administrative data from the German public insurance with the survey data from the Survey of Health, Ageing and Retirement in Europe (SHARE). Results show that the introduction of actuarial deductions in Germany led to a postponed pension benefit claiming date. Individuals working in physically demanding jobs at the end of their working career postponed benefit claiming less than workers in non-physically demanding jobs did.

German Abstract: In den vergangenen Jahrzehnten wurden verschiedene Reformen umgesetzt, die auf eine Verlängerung der Erwerbsleben älterer Arbeitnehmer abzielten. In der Literatur wurden bislang überwiegend die durchschnittlichen Effekte dieser Reformen untersucht. Evidenz zu den Auswirkungen auf heterogene Personengruppen ist bislang jedoch relativ begrenzt. Wir untersuchen daher die Auswirkungen der Einführung versicherungsmathematischer Abschläge für den vorzeitigen Renteneintritt, die in der deutschen Gesetzlichen Rentenversicherung (GRV) mit der Rentenreform 1992 eingeführt wurden. Im Speziellen analysieren wir, ob Personen in körperlich anstrengenden Berufen am Ende ihrer beruflichen Laufbahn anders auf die Einführung der Abschläge reagierten als Personen in nicht-anstrengenden Jobs. Die kohortenspezifische Einführung der Abschläge bietet exogene Variation zur Ermittlung des kausalen Reformeffekts auf die Renteneintrittsentscheidung. Wir schätzen Cox-Proportional-Hazard-Modelle unter Verwendung von SHARE-RV-Daten, der direkten Verknüpfung aus administrativen Daten der GRV und Umfragedaten des Surveys of Health, Ageing and Retirement in Europe (SHARE). Die Ergebnisse zeigen, dass Individuen durch die Einführung der Abschläge ihren Renteneintritt aufgeschoben haben, Personen in körperlich anstrengenden Berufen ihren Renteneintritt allerdings weniger stark aufschoben als die Gruppe der Personen in nicht-anstrengenden Berufen.

Keywords: Demographic change, retirement policies, retirement behavior, heterogeneity

JEL Classification: H55, J26

Suggested Citation

Goll, Nicolas and Hanemann, Felizia, Financial Incentives and Heterogeneity in Retirement Behavior An Empirical Analysis Based on SHARE-RV Data (December 21, 2020). MEA Discussion Paper No. 21-2020, Available at SSRN: https://ssrn.com/abstract=3752643 or http://dx.doi.org/10.2139/ssrn.3752643

Nicolas Goll (Contact Author)

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

Felizia Hanemann

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

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