Working Paper: CEPR ID: DP2795
Authors: Arnaud Dellis; Alain Jousten; Sergio Perelman
Abstract: The present Paper studies the retirement incentives for elderly people in Belgium. We model the incentive structure built into the various public early retirement and retirement systems. First, we compute indicators of benefit entitlement such as the social security wealth. Then, we use three different incentive measures based on the notion of social security wealth. In a third step, we perform an empirical estimation of micro-econometric probit and option value models. From our exceptionally rich and broad database, we are able to compute a rather accurate measure of all individuals? pension wealth, as well as of the implicit tax rates the elderly workers face in case of delayed retirement. We find strong evidence of social security-based financial incentives inducing most workers to retire at the earliest possible stage. Finally, we use the derived parameter estimates from the probit models to simulate the responses to various policy changes.
Keywords: Aging; Retirement; Social Security; Belgium
JEL Codes: H55; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social security wealth (H55) | probability of retirement (J26) |
| dynamic incentive variables (accrual, peak value, and option value) (D25) | probability of retirement (J26) |