Dolls, Mathias and Krolage, Carla (2023) 'Earned, not given'? The effect of lowering the full retirement age on retirement decisions. JOURNAL OF PUBLIC ECONOMICS, 223: 104909. ISSN 0047-2727,
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This paper analyzes behavioral responses to a 2014 reform in the German public pension system that lowered the full retirement age (FRA) of individuals with a long contribution history by up to two years and framed the new FRA as reference age for retirement. Using administrative data from public pension insurance accounts, we first document a substantial bunching response at the FRA exceeding the control group's bunching by 83%. Second, we show in a difference-in-difference setting that a 1.0 year decrease in the FRA leads to a reduction in the average pension claiming age by 0.3-0.4 years. Treated individuals neither have poorer health nor are more likely to be liquidity-constrained than individuals in the control group. Our results suggest that the strong responses to the reform are driven both by the new FRA serving as a reference point and by financial incentives. Estimated fiscal costs of the reform are at the upper end of the range of previous back-of-the-envelope calculations.& COPY; 2023 Elsevier B.V. All rights reserved.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | SOCIAL-SECURITY; RESPONSES; INCENTIVES; EMPLOYMENT; BEHAVIOR; HEALTH; Retirement age; Early retirement; Pension reform |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 31 Jan 2024 09:36 |
| Last Modified: | 31 Jan 2024 09:36 |
| URI: | https://pred.uni-regensburg.de/id/eprint/59728 |
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