Nonparametric Evidence on the Effects of Retirement Benefits on Labor Force Participation Decisions

51 Pages Posted: 27 Aug 2013

See all articles by Dayanand Manoli

Dayanand Manoli

University of California, Los Angeles (UCLA) - Department of Economics

Andrea Weber

Vienna University of Economics and Business; Austrian Institute of Economic Research (WIFO); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 2011

Abstract

This paper presents new empirical evidence on the effects of retirement benefits on labor force participation decisions. We use administrative data on the census of private sector employees in Austria and variation from mandated discontinuous changes in retirement benefits from the Austrian pension system. We present nonparametric, graphical evidence documenting labor supply responses to the policy discontinuities. Next, based on the nonparametric evidence and mandated financial incentives, we estimate extensive margin labor supply elasticities. We estimate elasticities of 0.12 for men and 0.38 for women. The evidence indicates these elasticities are primarily driven by substitution effects rather than wealth effects.

Suggested Citation

Manoli, Dayanand and Weber, Andrea Michaela, Nonparametric Evidence on the Effects of Retirement Benefits on Labor Force Participation Decisions (April 2011). Available at SSRN: https://ssrn.com/abstract=2316888 or http://dx.doi.org/10.2139/ssrn.2316888

Dayanand Manoli (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

8283 Bunche Hall
Los Angeles, CA 90095-1477
United States

Andrea Michaela Weber

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Institute for the Study of Labor (IZA)

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

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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