Labor Market and Distributional Effects of an Increase in the Retirement Age

33 Pages Posted: 9 Jul 2018

See all articles by Johannes Geyer

Johannes Geyer

German Institute for Economic Research (DIW Berlin)

Peter Haan

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

Anna Hammerschmid

German Institute for Economic Research (DIW Berlin)

Michael Peters

German Institute for Economic Research (DIW Berlin)

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Abstract

We evaluate the labor market and distributional effects of an increase in the early retirement age (ERA) from 60 to 63 for women. We use a regression discontinuity design which exploits the immediate increase in the ERA between women born in 1951 and 1952. The analysis is based on the German micro census which includes about 370,000 households per year. We focus on heterogeneous labor market effects on the individual and on the household level and we study the distributional implications using net household income. In this respect we extend the previous literature which mainly studied employment effects on the individual level.Our results show sizable labor market effects which strongly differ by subgroups. We document larger employment effects for women who cannot rely on other income on the household level, e.g. women with a low income partner. The distributional analysis shows on average no significant effects on female or household income. This result holds as well for heterogeneous groups: Even for the most vulnerable groups, such as single women, women without higher education, or low partner income, we do not find significant reductions in income. One reason for this result is program substitution.

Keywords: retirement age, pension reform, labor supply, early retirement, distributional effects, spillover effects, household

JEL Classification: J14, J18, J22, J26, H31

Suggested Citation

Geyer, Johannes and Haan, Peter and Hammerschmid, Anna and Peters, Michael, Labor Market and Distributional Effects of an Increase in the Retirement Age. Available at SSRN: https://ssrn.com/abstract=3209712 or http://dx.doi.org/10.2139/ssrn.3209712

Johannes Geyer (Contact Author)

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

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

Anna Hammerschmid

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

Mohrenstraße 58
Berlin, 10117
Germany

Michael Peters

German Institute for Economic Research (DIW Berlin)

Mohrenstraße 58
Berlin, 10117
Germany

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