The Effect of Pension Subsidies on Retirement Timing of Older Women: Evidence from a Regression Kink Design

Arbeitspapier

This paper provides a clear and transparent setting to study the effect of additional pension benefits on women's retirement decision. Using administrative pension insurance records from Germany, I examine the impact of a pension subsidy program to low pay workers, implemented in 1992. The subsidies have a kinked relationship with the recipients' average pension contribution, which led to sharply different slopes of benefits for similar women to the left and to the right of the kink point. Using a regression kink design, I find that 100 euros additional monthly pension benefits induce female recipients to claim pension earlier by about 10 months. The hazard rate to claim a pension at age 60 increases by 17%. A back-of-the-envelope calculation suggests the ratio of behavioral cost to mechanical cost of this subsidy program is 0.3, which is smaller than other anti-poverty programs such as extending unemployment benefits and progressive taxation. I find that the phasing out of this subsidy program can account for one third of the increase in women's age of claiming pension over the past decade.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 11831

Classification and Topics

• Classification: Wirtschaft ; Social Security and Public Pensions ; Demographic Economics: Public Policy ; Labor Force and Employment, Size, and Structure ; Retirement; Retirement Policies
• Subject: pension subsidy ; pension generosity ; retirement ; regression kink design

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ye, Han
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/185291
• Last update: 10.03.2025, 11:43 AM CET