Disability Pensions and Labor Supply

Barbara Hanel
Authors registered in the RePEc Author Service: Barbara Broadway ()

No 86, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: I investigate the incentive effects of disability pensions on the labor supply decision of the elderly in Germany. In the year 2001, a reform decreased the level of benefits and tightened the criteria of eligibility. The purpose of this paper is twofold: First, I estimate transition rates into disability retirement, both prior to and after the reform in order to evaluate the effect of the reform on retirement behavior. Second, I use the exogenous variation in (a) expected benefit levels and (b) expected benefit accruals that is caused by the reform, in order to obtain reliable estimates of individuals’ responses in retirement behavior to financial incentives. While health status and expected wages turn out to be important determinants of the decision to enter disability retirement, benefits have only a small effect.

Keywords: disability pensions; labor force exit; Germany (search for similar items in EconPapers)
JEL-codes: I10 J26 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2010-01
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https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... and-Labor-Supply.pdf First version, 2010 (application/pdf)

Related works:
Working Paper: The Effect of Disability Pension Incentives on Early Retirement Decisions (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:086_hanel

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