IDEAS home Printed from https://ideas.repec.org/p/fip/fedkrw/rwp00-09.html
   My bibliography  Save this paper

The effect of old-age insurance on male retirement : evidence from historical cross-country data

Author

Listed:
  • Richard L. Johnson

Abstract

I examine the effect of Old-Age Insurance systems on the labour supply of older men. Male retirement ages are crucial to the solvency of OAI systems. Historical data on participation rates and OAI rules in thirteen developed countries show rapid falls in participation among men aged 60-4 after pensions were extended to them. I estimate participation elasticities of -0.06 with respect to replacement rates and 0.19 to the net-of-tax wage. It does not appear that endogenous OAI changes bias the regression coefficients. The growth of OAI explains about 11 percent of the reduction in participation of men aged 60-4 since 1920; greater wealth probably explains most of the remainder.

Suggested Citation

  • Richard L. Johnson, 2000. "The effect of old-age insurance on male retirement : evidence from historical cross-country data," Research Working Paper RWP 00-09, Federal Reserve Bank of Kansas City.
  • Handle: RePEc:fip:fedkrw:rwp00-09
    as

    Download full text from publisher

    File URL: https://www.kansascityfed.org/documents/5420/pdf-RWP00-09.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
    2. N/A, 1959. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 1(1), pages 3-3, January.
    3. Costa, Dora L., 1998. "The Evolution of Retirement," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226116082, August.
    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.
    5. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-437, October.
    6. N/A, 1959. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 3(1), pages 3-3, May.
    7. Neumark, David & Powers, Elizabeth, 2000. "Welfare for the elderly: the effects of SSI on pre-retirement labor supply," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 51-80, October.
    8. Burkhauser, Richard V & Turner, John A, 1978. "A Time-Series Analysis on Social Security and Its Effect on the Market Work of Men at Younger Ages," Journal of Political Economy, University of Chicago Press, vol. 86(4), pages 701-715, August.
    9. N/A, 1959. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 2(1), pages 3-3, March.
    10. Blake, David, 2003. "Pension Schemes and Pension Funds in the United Kingdom," OUP Catalogue, Oxford University Press, edition 2, number 9780199243532.
    11. N/A, 1959. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 5(1), pages 3-3, September.
    12. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1.
    13. N/A, 1959. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 6(1), pages 3-3, November.
    14. N/A, 1959. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 4(1), pages 1-1, July.
    15. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    16. Kahn, James A., 1988. "Social security, liquidity, and early retirement," Journal of Public Economics, Elsevier, vol. 35(1), pages 97-117, February.
    17. Gary Burtless, 1986. "Social Security, Unanticipated Benefit Increases, and the Timing of Retirement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(5), pages 781-805.
    18. Friedberg, Leora, 1999. "The effect of old age assistance on retirement," Journal of Public Economics, Elsevier, vol. 71(2), pages 213-232, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bernardo Lanza Queiroz, 2007. "The determinants of male retirement in urban Brazil," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 17(1), pages 11-36, January-A.
    2. Ning, Manxiu & Gong, Jinquan & Zheng, Xuhui & Zhuang, Jun, 2016. "Does New Rural Pension Scheme decrease elderly labor supply? Evidence from CHARLS," China Economic Review, Elsevier, vol. 41(C), pages 315-330.
    3. Justina A. V. Fischer & Alfonso Sousa-Poza, 2009. "The Effect of Pension Generosity on Early Retirement: A Microdata Analysis for Europe from 1967 to 2004," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 311/2009, Department of Economics, University of Hohenheim, Germany.
    4. Tryggvi Thor Herbertsson, 2001. "Shrinking Labour Forces and Early Retirement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(4), pages 31-37, October.
    5. Jim Been & Olaf Vliet, 2017. "Early Retirement across Europe. Does Non-Standard Employment Increase Participation of Older Workers?," Kyklos, Wiley Blackwell, vol. 70(2), pages 163-188, May.
    6. Richard Disney, 2001. "Europe: Is There an Aging Crisis or is it a Public Pension Problem?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(4), pages 25-30, February.
    7. Richard L. Johnson, 2001. "Effects of old-age insurance on female retirement : evidence from cross-country time-series data," Research Working Paper RWP 01-08, Federal Reserve Bank of Kansas City.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    2. Henderson, Peter & Banks, Seymour & Myers, Lester H. & Hochman, Eithan & Hochman, Oded & Ward, Ronald W. & Eiler, Doyle A. & Forker, Olan D. & Branson, Robert E., 1973. "Measurements of Response to Generic Promotion of Food Products: Seminar Proceedings," Reports 97273, Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center.
    3. Ferreira, Pedro Cavalcanti & Santos, Marcelo Rodrigues dos, 2008. "The effect of social security, demography and technology on retirement," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 683, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    4. Richard L. Johnson, 2001. "Effects of old-age insurance on female retirement : evidence from cross-country time-series data," Research Working Paper RWP 01-08, Federal Reserve Bank of Kansas City.
    5. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    6. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2008. "Demographic Change, Institutional Settings, and Labor Supply," PGDA Working Papers 4208, Program on the Global Demography of Aging.
    7. Karakaya, Güngör, 2008. "Early cessation of activity in the labour market: impact of supply and demand factors," MPRA Paper 13390, University Library of Munich, Germany.
    8. Pedro Cavalcanti Ferreira & Marcelo Rodrigues dos Santos, 2013. "The Effect of Social Security, Health, Demography and Technology on Retirement," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 350-370, April.
    9. Estelle James & Alejandra Cox Edwards, 2005. "Do Individual Accounts Postpone Retirement: Evidence from Chile," Working Papers wp098, University of Michigan, Michigan Retirement Research Center.
    10. Gary Burtless & Joseph F. Quinn, 2000. "Retirement Trends and Policies to Encourage Work Among Older Americans," Boston College Working Papers in Economics 436, Boston College Department of Economics.
    11. Andries de Grip & Didier Fouarge & Raymond Montizaan, 2013. "How Sensitive are Individual Retirement Expectations to Raising the Retirement Age?," De Economist, Springer, vol. 161(3), pages 225-251, September.
    12. Sebnem Kalemli-Ozcan & David Weil, 2010. "Mortality change, the uncertainty effect, and retirement," Journal of Economic Growth, Springer, vol. 15(1), pages 65-91, March.
    13. Courtney Coile & Jonathan Gruber, 2001. "Social Security Incentives for Retirement," NBER Chapters, in: Themes in the Economics of Aging, pages 311-354, National Bureau of Economic Research, Inc.
    14. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    15. Stefan Staubli, 2009. "Tightening the Purse Strings: The Effect of Stricter DI Eligibility Criteria on Labor Supply," NRN working papers 2009-30, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    16. Alexander M. Danzer, 2013. "Benefit Generosity and the Income Effect on Labour Supply: Quasi‐Experimental Evidence," Economic Journal, Royal Economic Society, vol. 123, pages 1059-1084, September.
    17. Marjan, MAES, 2008. "Financial and redistributive impact of reforming the old-age pension system in Belgium," Discussion Papers (ECON - Département des Sciences Economiques) 2008040, Université catholique de Louvain, Département des Sciences Economiques.
    18. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2008. "The High Cost of Low Fertility in Europe," PGDA Working Papers 3208, Program on the Global Demography of Aging.
    19. David E. Bloom & David Canning & Gunther Fink & Jocelyn Finlay, 2009. "The Effect of Social Security Reform on Male Retirement in High and Middle Income Countries," PGDA Working Papers 4809, Program on the Global Demography of Aging.
    20. David Dorn & Alfonso Sousa-Poza, 2005. "Early Retirement: Free Choice or Forced Decision," CESifo Working Paper Series 1542, CESifo.

    More about this item

    Keywords

    Insurance; Social security; Retirement;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedkrw:rwp00-09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Zach Kastens (email available below). General contact details of provider: https://edirc.repec.org/data/frbkcus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.