The Effects of the Early Retirement Age on Retirement Decisions

43 Pages Posted: 22 Aug 2016  

Day Manoli

University of Texas at Austin

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)

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Abstract

We present quasi-experimental evidence on the effects of increasing the Early Retirement Age (ERA) on older workers' retirement decisions. The analysis is based on social security reforms in Austria in 2000 and 2004, and administrative data allows us to distinguish between pension claims and job exits. Using a Regression Kink Design, we estimate that, within a birth cohort, a 1.0 year increase in the ERA leads to a 0.4 year increase in the average job exiting age and a 0.5 year increase in the average pension claiming age. When the ERA increases, many older workers remain in their jobs longer.

Keywords: retirement, early retirement age, pension reform, life cycle labor supply, regression kink design

JEL Classification: H55, J21, J22, J26

Suggested Citation

Manoli, Day and Weber, Andrea, The Effects of the Early Retirement Age on Retirement Decisions. IZA Discussion Paper No. 10154. Available at SSRN: https://ssrn.com/abstract=2826988

Day Manoli (Contact Author)

University of Texas at Austin ( email )

Austin, TX 78712
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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