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The causal effect of partial retirement on older workers’ labor force participation

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  • Rebecca Schrader

Abstract

In this study, I investigate the effect of partial retirement at the firm level on older workers’ labor participation. Thereby, I contribute to the controversial debate about the effects of partial retirement. Using detailed administrative employer-employee data from Germany, I exploit the introduction of partial retirement options in Germany related to the law on PR of 1996 within a difference-in-differences framework. My results show that older workers’ labor participation responds to the introduction of partial retirement and reveals substantial effect heterogeneities with regard to the specific partial retirement arrangement. Overall, I find evidence that partial retirement has the potential to extend older workers’ labor participation and thereby to serve as an instrument to lower the financial burden of governments struggling with the economic costs of demographic aging.

Suggested Citation

  • Rebecca Schrader, 2021. "The causal effect of partial retirement on older workers’ labor force participation," Working Papers 215, Bavarian Graduate Program in Economics (BGPE).
    • Handle: RePEc:bav:wpaper:215_schrader
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    File URL: https://bgpe.cms.rrze.uni-erlangen.de/files/2023/07/215_casual_effect_of_partial-retirement_on_older_workers.pdf
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    References listed on IDEAS

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    1. Lukas Inderbitzin & Stefan Staubli & Josef Zweimüller, 2016. "Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 253-288, February.
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    6. Riphahn, Regina T. & Schrader, Rebecca, 2023. "Reforms of an early retirement pathway in Germany and their labor market effects," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(3), pages 304-330, July.
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    9. Martin Huber & Michael Lechner & Conny Wunsch, 2016. "The Effect of Firms’ Phased Retirement Policies on the Labor Market Outcomes of Their Employees," ILR Review, Cornell University, ILR School, vol. 69(5), pages 1216-1248, October.
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    More about this item

    Keywords

    older workers; partial retirement; retirement decision; difference-in-differences;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market 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

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