Micro-Modelling of Retirement in Belgium
43 Pages Posted: 17 May 2001
Date Written: May 2001
Abstract
The present Paper studies the retirement incentives for elderly people in Belgium. We model the incentive structure built into the various public early retirement and retirement systems. First, we compute indicators of benefit entitlement such as the social security wealth. Then, we use three different incentive measures based on the notion of social security wealth. In a third step, we perform an empirical estimation of micro-econometric probit and option value models. From our exceptionally rich and broad database, we are able to compute a rather accurate measure of all individuals' pension wealth, as well as of the implicit tax rates the elderly workers face in case of delayed retirement. We find strong evidence of social security-based financial incentives inducing most workers to retire at the earliest possible stage. Finally, we use the derived parameter estimates from the probit models to simulate the responses to various policy changes.
Keywords: Ageing, Belgium, retirement, social security
JEL Classification: H55, J26
Suggested Citation: Suggested Citation
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