Early Retirement and Financial Incentives: Differences Between High and Low Wage Earners

Arbeitspapier

This paper investigates the impact of financial incentives on early retirement behaviour for high and low wage earners. Using a stylized life-cycle model, we derive hypotheses on the behaviour of the two types. We use administrative data and employ a linear random effects model to test the predictions. We exploit exogenous variation in the replacement rate over birth cohorts of workers who are eligible to a transitional early retirement scheme. The empirical results show that low wage earners are, as predicted by the model, more sensitive to financial incentives. This implies that low wage earners will experience a stronger incentive to continue working in an early retirement scheme with a low implicit tax rate.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 8466

Classification and Topics

• Classification: Wirtschaft ; Economics of Gender; Non-labor Discrimination ; Time Allocation and Labor Supply ; Geographic Labor Mobility; Immigrant Workers
• Subject: pensions ; early retirement ; labour market behaviour

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Euwals, Rob ; Trevisan, Elisabetta
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/103482
• Last update: 10.03.2025, 11:43 AM CET