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The effects of pension changes on age of first benefit receipt: Regression discontinuity evidence from repatriated ethnic Germans

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  • Puhani, Patrick A.
  • Tabbert, Falko

Abstract

To estimate the effects of large cuts in pensions on the age of first benefit receipt, we exploit two natural experiments in which such cuts affect a group of repatriated ethnic German workers. The pensions were cut by about 12%, yet, according to our regression discontinuity estimates using administrative pension data, there was no significant delay in the age of first pension receipt. Based on additional data sources, we also find that (i) almost all people in our study population had left the labour force by the time they became pension recipients and (ii) repatriated ethnic Germans held similar jobs to and exhibited similar retirement behaviour as low-skilled Germans. These results are consistent with low-skilled workers in Germany being frozen in a corner-solution equilibrium in which the optimal choice is to retire as early as possible.

Suggested Citation

  • Puhani, Patrick A. & Tabbert, Falko, 2016. "The effects of pension changes on age of first benefit receipt: Regression discontinuity evidence from repatriated ethnic Germans," Labour Economics, Elsevier, vol. 38(C), pages 12-23.
    • Handle: RePEc:eee:labeco:v:38:y:2016:i:c:p:12-23
    DOI: 10.1016/j.labeco.2015.10.003
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    More about this item

    Keywords

    Policy; Evaluation; Pension reform; Labour supply; Retirement;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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