TY - JOUR

T1 - The effects of pension changes on age of first benefit receipt

T2 - Regression discontinuity evidence from repatriated ethnic Germans

AU - Puhani, Patrick A.

AU - Tabbert, Falko

N1 - Funding Information: Part of this research was supported by the German Research Foundation (DFG) within the project “Labour Market Effects of Social Policy”, which is part of the research initiative “Flexibility in Heterogeneous Labour Markets”. This research would not have been possible without the support of employees of the German Pension Insurance's Research Data Center . We are grateful to the editor Steven Haider and two anonymous referees, as well as Steffen Altmann, Antonio Brettschneider, David Card, Florent Fremigacci, Corrado Giulietti, Torsten Hammer, Ingmar Hansen, Jürgen Hofmann, Andrew Oswald, Anna Katharina Pikos, Andrew Reilly, Craig Riddell, Emmanuel Saez, Konrad Schäfer, Hilmar Schneider, Michael Stegmann, Alexander Straub, Konstantinos Tatsiramos, Friederike von Haaren, Andrea Weber, seminar participants at CLE, UC Berkeley, at IZA, Bonn, the German Economic Association , the European Association of Labour Economists , at the Universities of Frankfurt and Nuremberg, and at the research initiative's IAB meeting in Nuremberg for helpful comments. All remaining errors are our own.

PY - 2016/1/1

Y1 - 2016/1/1

N2 - To estimate the effects of large cuts in pensions on the age of first benefit receipt, we exploit two natural experiments in which such cuts affect a group of repatriated ethnic German workers. The pensions were cut by about 12%, yet, according to our regression discontinuity estimates using administrative pension data, there was no significant delay in the age of first pension receipt. Based on additional data sources, we also find that (i) almost all people in our study population had left the labour force by the time they became pension recipients and (ii) repatriated ethnic Germans held similar jobs to and exhibited similar retirement behaviour as low-skilled Germans. These results are consistent with low-skilled workers in Germany being frozen in a corner-solution equilibrium in which the optimal choice is to retire as early as possible.

AB - To estimate the effects of large cuts in pensions on the age of first benefit receipt, we exploit two natural experiments in which such cuts affect a group of repatriated ethnic German workers. The pensions were cut by about 12%, yet, according to our regression discontinuity estimates using administrative pension data, there was no significant delay in the age of first pension receipt. Based on additional data sources, we also find that (i) almost all people in our study population had left the labour force by the time they became pension recipients and (ii) repatriated ethnic Germans held similar jobs to and exhibited similar retirement behaviour as low-skilled Germans. These results are consistent with low-skilled workers in Germany being frozen in a corner-solution equilibrium in which the optimal choice is to retire as early as possible.

KW - Evaluation

KW - Labour supply

KW - Pension reform

KW - Policy

KW - Retirement

UR - http://www.scopus.com/inward/record.url?scp=84947967894&partnerID=8YFLogxK

U2 - 10.1016/j.labeco.2015.10.003

DO - 10.1016/j.labeco.2015.10.003

M3 - Article

AN - SCOPUS:84947967894

VL - 38

SP - 12

EP - 23

JO - Labour economics

JF - Labour economics

SN - 0927-5371

ER -