Beware of the Employer: Financial Incentives for Employees May Fail to Prolong Old Age Employment

41 Pages Posted: 25 Feb 2020

See all articles by Svenja Lorenz

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: 2020

Abstract

This paper shows that increasing the normal retirement age and introducing pension deductions for retirement before normal retirement age in Germany did not prolong employment of older men. The reason for this surprising result is that employers encouraged their employees to use the bridge options unemployment or partial retirement instead of the early retirement option for the long-term insured. Bridge options allowed employers to terminate employment considerably earlier than the pension for long-term insured. Employers however had to compensate their employees for the substantially higher costs of the bridge options. Therefore mainly employers with high employment adaption costs induced employees to use a bridge option during the implementation phase of the pension reform.

Keywords: cohort-specific pension reform, early retirement, partial retirement, unemployment, labor supply, labor demand

JEL Classification: J14, J18, J22, J26

Suggested Citation

Lorenz, Svenja and Pfister, Mona and Zwick, Thomas, Beware of the Employer: Financial Incentives for Employees May Fail to Prolong Old Age Employment (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-007, Available at SSRN: https://ssrn.com/abstract=3543940 or http://dx.doi.org/10.2139/ssrn.3543940

Svenja Lorenz (Contact Author)

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
19
Abstract Views
310
PlumX Metrics