Abstract

http://ssrn.com/abstract=1976313
 


 



Early Retirement and Financial Incentives: Differences between High and Low Wage Earners


Rob Euwals


CPB Netherlands Bureau of Economic Policy Research; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)

Elisabetta Trevisan


Ca Foscari University of Venice

December 1, 2011

Netspar Discussion Paper No. 12/2011-105

Abstract:     
This paper investigates the impact of financial incentives on early retirement behaviour for high and low wage earners. Using a stylized life-cycle model, we derive hypotheses on the behaviour of the two types. We use administrative data and employ two identification strategies to test the predictions. First, we exploit exogenous variation in the replacement rate over birth cohorts of workers who are eligible to a transitional early retirement scheme. Second, we employ a regression discontinuity design by comparing workers who are eligible and non-eligible to the transitional scheme. The empirical results show that low wage earners are, as predicted by the model, more sensitive to financial incentives. The results imply that low wage earners will experience a stronger incentive to continue working in an optimal early retirement scheme.

Number of Pages in PDF File: 31

Keywords: pensions, early retirement, labour market behaviour

JEL Classification: J16, J22, J61

working papers series


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Date posted: December 24, 2011  

Suggested Citation

Euwals, Rob and Trevisan, Elisabetta, Early Retirement and Financial Incentives: Differences between High and Low Wage Earners (December 1, 2011). Netspar Discussion Paper No. 12/2011-105. Available at SSRN: http://ssrn.com/abstract=1976313 or http://dx.doi.org/10.2139/ssrn.1976313

Contact Information

Rob Euwals (Contact Author)
CPB Netherlands Bureau of Economic Policy Research ( email )
P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands
+31 70 33 83 438 (Phone)
+31 70 33 83 350 (Fax)
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
+49 228 3894 302 (Phone)
+49 228 3894 210 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Elisabetta Trevisan
Ca Foscari University of Venice ( email )
San Giobbe - Cannaregio 873
Venice, Veneto 30121
Italy
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