The Role of Labor Demand in the Labor Market Effects of a Pension Reform

40 Pages Posted: 8 Nov 2019

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

Svenja Lorenz

University of Würzburg

Mona Pfister

University of Würzburg

Thomas Zwick

University of Würzburg - Business Administration & Economics; Centre for European Economic Research (ZEW); Maastricht University - Research Centre for Education and the Labour Market (ROA)

Date Written: November 2019

Abstract

This paper shows that labor demand plays an important role in the labor market reactions of older women affected by pension deductions for early retirement. Based on a large representative sample of the German workforce (SIAB), we calculate the consequences of individual financial incentive changes caused by a pension reform in Germany on employment, unemployment, and partial retirement. The reform reduces financial incentives for early retirement. In line with labor demand theory, we show that employers with a high share of older worker inflow compared with the share of younger worker inflow, employers in sectors with a high share of collective bargaining agreements, and employers in sectors with few investments in research and development are more responsive to their employees´ demand to stay longer in the labor market. These employer groups mainly offer their older employees the option of staying longer in partial retirement instead of forcing them into unemployment before retirement.

Keywords: pension reform, labor demand effects, early retirement, employer heterogeneity

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

Suggested Citation

Geyer, Johannes and Haan, Peter and Lorenz, Svenja and Pfister, Mona and Zwick, Thomas, The Role of Labor Demand in the Labor Market Effects of a Pension Reform (November 2019). DIW Berlin Discussion Paper No. 1827 (2019). Available at SSRN: https://ssrn.com/abstract=3482338 or http://dx.doi.org/10.2139/ssrn.3482338

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

Svenja Lorenz

University of Würzburg ( email )

Sanderring 2
Würzburg, D-97070
Germany

Mona Pfister

University of Würzburg ( email )

Sanderring 2
Würzburg, D-97070
Germany

Thomas Zwick

University of Würzburg - Business Administration & Economics ( email )

Sanderring 2
Wuerzburg, D-97070
Germany

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Maastricht University - Research Centre for Education and the Labour Market (ROA) ( email )

P.O. Box 616
Maastricht, MD6200
Netherlands

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