Health, financial incentives, and early retirement: Micro-simulation evidence for Germany

Hendrik Jürges (), Lars Thiel, Tabea Bucher-Koenen, Johannes Rausch, Morten Schuth and Axel Börsch-Supan
Additional contact information
Hendrik Jürges: University of Wuppertal
Lars Thiel: University of Wuppertal
Tabea Bucher-Koenen: Munich Center for the Economics of Aging
Johannes Rausch: Munich Center for the Economics of Aging
Morten Schuth: Munich Center for the Economics of Aging
Axel Börsch-Supan: Munich Center for the Economics of Aging
Authors registered in the RePEc Author Service: Hendrik Juerges

No SDP14003, Schumpeter Discussion Papers from Universitätsbibliothek Wuppertal, University Library

Abstract: About 20% of German workers retire on disability pensions. Disability pensions provide fairly generous benefits for those who are not already age-eligible for an old-age pension and who are deemed unable to work for health reasons. In this paper, we use two sets of individual survey data to study the role of health and financial incentives in early retirement decisions in Germany, in particular disability benefit uptake. We show that financial incentives to retire do affect sick individuals at least as much as healthy individuals. Based on 25 years of individual survey data and empirical models of retirement behavior, we then simulate changes in the generosity of disability pensions to understand how these changes would affect retirement behavior. Our results show that making the disability benefit award process more stringent without closing other early retirement routes would not greatly increase labor force participation in old age.

JEL-codes: H55 J14 J26 (search for similar items in EconPapers)
Pages: 59
Date: 2014-02
New Economics Papers: this item is included in nep-age, nep-dem, nep-eur, nep-hea, nep-lab and nep-sog
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Related works:
Chapter: Health, Financial Incentives, and Early Retirement: Microsimulation Evidence for Germany (2014)
Working Paper: Health, Financial Incentives, and Early Retirement: Micro-Simulation Evidence for Germany (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bwu:schdps:sdp14003

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