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Early retirement incentives and transition into informality

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  • Asik, Gunes A.

Abstract

This paper explores the impact of a super early retirement incentive that allowed men to retire as early as 44 years old in Turkey in 1992. Relying on a Fuzzy Regression Discontinuity Design, I find that taking up the incentives significantly reduced the labor force participation of middle-aged men in Turkey. Analysis by education categories suggests that the incentives had an impact on both the skilled and unskilled labor force. I find that the policy-induced take-up of pension benefit receipt significantly increased the probability of moving into informal employment contracts. Findings suggest that the probability of informal wage employment increased for low-skilled individuals while the probability of informal self-employment probability increased for high-skilled individuals. Among low-skilled workers, the incentives seem to have relaxed credit constraints.

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  • Asik, Gunes A., 2024. "Early retirement incentives and transition into informality," Labour Economics, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:labeco:v:90:y:2024:i:c:s0927537124000563
    DOI: 10.1016/j.labeco.2024.102561
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    More about this item

    Keywords

    Retirement; Pension reforms; Labor Markets; Informality;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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