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Effects of Early Retirement Policy Changes on Working until Retirement: Natural Experiment

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  • Cécile R.L. Boot

    (Department of Public and Occupational Health, Amsterdam Public Health Research Institute, Amsterdam UMC, VU University, 1081 BT Amsterdam, The Netherlands)

  • Micky Scharn

    (Department of Public and Occupational Health, Amsterdam Public Health Research Institute, Amsterdam UMC, VU University, 1081 BT Amsterdam, The Netherlands)

  • Allard J. van der Beek

    (Department of Public and Occupational Health, Amsterdam Public Health Research Institute, Amsterdam UMC, VU University, 1081 BT Amsterdam, The Netherlands)

  • Lars L. Andersen

    (National Research Centre for the Working Environment, 2100 Copenhagen, Denmark)

  • Chris T.M. Elbers

    (Department of Economics, VU University, 1081 HV Amsterdam, The Netherlands)

  • Maarten Lindeboom

    (Department of Economics, VU University, 1081 HV Amsterdam, The Netherlands)

Abstract

Many European countries have implemented pension reforms to increase the statutory retirement age with the aim of increasing labor supply. However, not all older workers may be able or want to work to a very high age. Using a nation-wide register data of labor market transitions, we investigated in this natural experiment the effect of an unexpected change in the Dutch pension system on labor market behaviors of older workers. Specifically, we analyzed transitions in labor market positions over a 5-year period in two nation-wide Dutch cohorts of employees aged 60 years until they reached the retirement age ( n = 23,703). We compared transitions between the group that was still entitled to receive early retirement benefits to a group that was no longer entitled to receive early retirement benefits. Results showed that the pension reform was effective in prolonging work participation until the statutory retirement age (82% vs. 61% at age 64), but also to a larger proportion of unemployment benefits in the 1950 cohort (2.0–4.2%) compared to the 1949 cohort (1.4–3.2%). Thus, while ambitious pension reforms can benefit labor supply, the adverse effects should be considered, especially because other studies have shown a link between unemployment and poor health.

Suggested Citation

  • Cécile R.L. Boot & Micky Scharn & Allard J. van der Beek & Lars L. Andersen & Chris T.M. Elbers & Maarten Lindeboom, 2019. "Effects of Early Retirement Policy Changes on Working until Retirement: Natural Experiment," IJERPH, MDPI, vol. 16(20), pages 1-12, October.
    • Handle: RePEc:gam:jijerp:v:16:y:2019:i:20:p:3895-:d:276423
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    References listed on IDEAS

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    1. Regina T. Riphahn, 1999. "Income and employment effects of health shocks A test case for the German welfare state," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(3), pages 363-389.
    2. Lindeboom, Maarten & Montizaan, Raymond, 2018. "Pension Reform: Disentangling Retirement and Savings Responses," IZA Discussion Papers 11620, Institute of Labor Economics (IZA).
    3. Kerkhofs, Marcel & Lindeboom, Maarten & Theeuwes, Jules, 1999. "Retirement, financial incentives and health," Labour Economics, Elsevier, vol. 6(2), pages 203-227, June.
    4. Gruber, Jonathan & Wise, David, 1998. "Social Security and Retirement: An International Comparison," American Economic Review, American Economic Association, vol. 88(2), pages 158-163, May.
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    Cited by:

    1. Tomasz Jedynak, 2022. "Does the Formulation of the Decision Problem Affect Retirement?—Framing Effect and Planned Retirement Age," IJERPH, MDPI, vol. 19(4), pages 1-30, February.
    2. Claire Duchene & Benoît Bayenet & Ilan Tojerow, 2023. "Policy brief :Les effets de la pension sur la santé," ULB Institutional Repository 2013/363611, ULB -- Universite Libre de Bruxelles.
    3. Schneider, Ulrich & Groneck, Max, 2022. "Pension Reforms, Labor supply and Savings. The Importance of Natural Experiments for Structural Estimation," VfS Annual Conference 2022 (Basel): Big Data in Economics 264059, Verein für Socialpolitik / German Economic Association.
    4. Maaike van der Noordt & Johan J. Polder & Marjanne H. D. Plasmans & Henk B. M. Hilderink & Dorly J. H. Deeg & Theo G. van Tilburg & Suzan van der Pas & Fons van der Lucht, 2022. "Exploring Health Trends Prior to State Pension Age for The Netherlands up to 2040," IJERPH, MDPI, vol. 19(7), pages 1-13, April.

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