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Early retirement of employees in demanding jobs: Evidence from a German pension reform

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  • Geyer, Johannes
  • Lorenz, Svenja
  • Zwick, Thomas
  • Bruns, Mona
Abstract
Early retirement options are usually targeted at employees at risk of not reaching their regular retirement age in employment. An important at-risk group comprises employees who have worked in demanding jobs for many years. This group may be particularly negatively affected by the abolition of early retirement options. To measure differences in labor market reactions of employees in low- and high-demand jobs, we exploit the quasi-natural experiment of a cohort-specific pension reform that increased the early retirement age for women from 60 to 63 years. Based on a large administrative dataset, we use a regression-discontinuity approach to estimate the labor market reactions. Surprisingly, we find the same relative employment increase of about 25% for treated women who were exposed to low and to high job demand. For older women in demanding jobs, we also do not find substitution effects into unemployment, partial retirement, disability pension, or inactivity. Eligibility for the pension for women required highlabor market attachment; thus, we argue that this eligibility rule induced a positive selection of healthy workers into early retirement.

Suggested Citation

  • Geyer, Johannes & Lorenz, Svenja & Zwick, Thomas & Bruns, Mona, 2021. "Early retirement of employees in demanding jobs: Evidence from a German pension reform," ZEW Discussion Papers 21-082, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:21082
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    References listed on IDEAS

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    Cited by:

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    2. Niklas Gohl, 2023. "Working Longer, Working Stronger? The Forward-Looking Effects of Increasing the Retirement Age on (Un)employment Behaviour," CEPA Discussion Papers 63, Center for Economic Policy Analysis.
    3. Stüber, Heiko & Dauth, Wolfgang & Eppelsheimer, Johann, 2023. "A guide to preparing the sample of integrated labour market biographies (SIAB, version 7519 v1) for scientific analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-7.
    4. Dennis C. Tale, 2023. "The Impact of the COVID-19 Pandemic on the German Pension System," ACTA VSFS, University of Finance and Administration, vol. 17(1), pages 60-72.
    5. Niklas Gohl, 2023. "Working Longer, Working Stronger? The Forward-Looking Effects of Increasing the Retirement Age on (Un)employment Behaviour," Berlin School of Economics Discussion Papers 0013, Berlin School of Economics.
    6. Prinz Aloys & Wolfstetter Elmar, 2024. "Rentenversicherung: Lebenserwartung berücksichtigen," Wirtschaftsdienst, Sciendo, vol. 104(9), pages 589-589.
    7. Felder, Lars & Geyer, Johannes & Haan, Peter, 2024. "Early retirement for early starters - A well targeted policy for people with high job demand?," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302369, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    pension reform; job demand; early retirement; quasi-experimental variation;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • 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
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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