Reforms of an Early Retirement Pathway in Germany and their Labor Market Effects

Riphahn RT, Schrader R (2022)

Publication Language: English

Publication Type: Journal article, Original article

Publication year: 2022

Journal

Journal of Pension Economics & Finance Cambridge University Press (CUP)

DOI: 10.1017/S1474747221000421

Abstract

We investigate the unemployment pathway to retirement in Germany and study the causal effects of two early retirement reforms. Reform 1 (NRA) increased normal retirement age stepwise from 60 to 65. Simultaneously, it became possible to use early retirement with benefit discounts. Reform 2 (ERA) increased the age of early retirement stepwise from 60 to 63. We investigate behavioral responses to the reforms using administrative data and difference-in-differences strategies. We find strong and significant causal effects of both reforms. Individuals postponed retirement, stayed employed longer, postponed unemployment, and shifted to alternative pathways into retirement. The overall use of the retirement system declined by about 1.5 and 2 months per person after each of the two reforms. Individuals with low pension wealth and those who were affected immediately by the reform responded more strongly.

Authors with CRIS profile

Regina Therese Riphahn Lehrstuhl für Statistik und empirische Wirtschaftsforschung Rebecca Schrader Lehrstuhl für Statistik und empirische Wirtschaftsforschung

Related research project(s)

Arbeitsmarkteffekte der Reform des vorzeitigen Rentenbezugs Sept. 1, 2018 - March 31, 2021

How to cite

APA:

Riphahn, R.T., & Schrader, R. (2022). Reforms of an Early Retirement Pathway in Germany and their Labor Market Effects. Journal of Pension Economics & Finance. https://dx.doi.org/10.1017/S1474747221000421

MLA:

Riphahn, Regina Therese, and Rebecca Schrader. "Reforms of an Early Retirement Pathway in Germany and their Labor Market Effects." Journal of Pension Economics & Finance (2022).

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