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Who wants (them) to work longer?

Author

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  • Bittschi, Benjamin
  • Wigger, Berthold U.

Abstract

This paper examines age-specific individual preferences for the legal retirement age. Within a theoretical model, we develop the hypothesis that retirees prefer a higher legal retirement age than workers, and that newly retired individuals prefer the highest retirement age. Retirees benefit from a positive fiscal externality. A higher legal retirement age leads to higher pension benefits, without retirees having to bear the costs in the form of a longer working life. We corroborate the hypothesis empirically with a fuzzy regression discontinuity design and show that newly retired individuals are indeed most in favor of an increasing retirement age. We conclude that in aging societies the political feasibility of raising the legal retirement age increases.

Suggested Citation

  • Bittschi, Benjamin & Wigger, Berthold U., 2023. "Who wants (them) to work longer?," Economics Letters, Elsevier, vol. 227(C).
    • Handle: RePEc:eee:ecolet:v:227:y:2023:i:c:s0165176523001477
    DOI: 10.1016/j.econlet.2023.111122
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    More about this item

    Keywords

    Legal retirement age; Age-specific preferences; Pension reform;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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