Estimating retirement behavior with special early retirement offers

Matias Eklöf () and Daniel Hallberg
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Matias Eklöf: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2006:13, Working Paper Series from Uppsala University, Department of Economics

Abstract: We model retirement behavior in Sweden during the 1990ies with focus on voluntary early retirement where there is an option for “buy-outs”. An employer can offer the employees generous pension programs if the employee agrees on early retirement. Earlier studies have neglected such offers, but in doing so, estimates of the individuals’ responses to financial incentives in a retirement decision are likely to be biased upward. We propose an estimation strategy where the retirement decision and the accesses to early retirement pension offers are estimated in a simultaneous equation system, yielding unbiased estimates of the model parameters. We apply the model using detailed Swedish register data. Our results indicate that the marginal effects in retirement probability w.r.t. a change in financial incentives is less pronounced if early retirement pensions are accounted for. Further, we illustrate that the early retirement probabilities would decrease by 10-30 percent if early retirement pension offers were absent.

Keywords: Retirement; early retirement pension; golden handshakes; occupational pension; demand for old workers (search for similar items in EconPapers)
JEL-codes: J14 J21 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006-05-17
New Economics Papers: this item is included in nep-lab and nep-pub
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Citations: View citations in EconPapers (11)

Published as Eklöf, Matias and Daniel Hallberg, 'Do buy-outs of older workers matter? Estimating retirement behavior with special early retirement offers' in International Journal of Manpower, 2010.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2006_013

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