Labor Supply and the Pension System - Evidence from a Regression Kink Design

39 Pages Posted: 8 Mar 2016  

Barbara Engels

German Institute for Economic Research (DIW Berlin)

Johannes Geyer

German Institute for Economic Research (DIW Berlin)

Peter Haan

DIW Berlin, German Institute for Economic Research; IZA Institute of Labor Economics

Date Written: October 31, 2015

Abstract

This paper uses a Regression Kink Design to estimate the labor supply effects of changes in the financial incentives in the pension system. In particular we analyze the effect of the introduction of pension deductions for early retirement on female labor supply behavior. This reform allows to exploit exogenous variation in benefits using kinks in the schedule of pension benefits depending on the birth cohort. For the empirical analysis we use high-quality administrative data from the German Federal Pension Insurance (VSKT) and find positive and significant effects of the reform on labor supply behavior.

Keywords: Pension reform, Regression Kink Design, labor supply

JEL Classification: J18, H21

Suggested Citation

Engels, Barbara and Geyer, Johannes and Haan, Peter, Labor Supply and the Pension System - Evidence from a Regression Kink Design (October 31, 2015). Netspar Discussion Paper No. 10/2015-075. Available at SSRN: https://ssrn.com/abstract=2744638 or http://dx.doi.org/10.2139/ssrn.2744638

Barbara Engels

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Johannes Geyer

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?uid=jgeyer&language=en

Peter Haan (Contact Author)

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

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

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