Working Paper: NBER ID: w27518
Authors: Axel H. Börsch-Supan; Johannes Rausch; Nicolas Goll
Abstract: As much like other industrialized countries, in recent decades the employment rate in Germany for those aged 55 to 69 had been declining first to considerably rise again afterwards. This paper investigates the role of structural policy changes, in particular reforms of the pension system, since 1980 in explaining this trend reversal. We summarize the institutional changes and pension reforms that may account for the trend reversal, and calculate an “implicit tax on working longer”. We find that for both men and women the increase in the employment rate coincides with a reduction in the early retirement incentive. The reduction of incentives mainly stems from the introduction of actuarial deductions for early retirement and from the abolishment of specific early retirement pathways.
Keywords: Pension Reforms; Retirement Behavior; Labor Force Participation
JEL Codes: H55; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pension reforms (H55) | labor force participation (LFP) (J22) |
| actuarial deductions for early retirement (J26) | employment rate among older individuals (J26) |
| abolishment of certain early retirement pathways (J26) | employment rate among older individuals (J26) |
| implicit tax on working longer (J26) | employment rate among older individuals (J26) |
| pension policies (H55) | women's labor force participation (J21) |