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The causal effect of partial retirement on older workers’ labor force participation

Rebecca Schrader

No 215, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: In this study, I investigate the effect of partial retirement at the firm level on older workers’ labor participation. Thereby, I contribute to the controversial debate about the effects of partial retirement. Using detailed administrative employer-employee data from Germany, I exploit the introduction of partial retirement options in Germany related to the law on PR of 1996 within a difference-in-differences framework. My results show that older workers’ labor participation responds to the introduction of partial retirement and reveals substantial effect heterogeneities with regard to the specific partial retirement arrangement. Overall, I find evidence that partial retirement has the potential to extend older workers’ labor participation and thereby to serve as an instrument to lower the financial burden of governments struggling with the economic costs of demographic aging.

Keywords: older workers; partial retirement; retirement decision; difference-in-differences (search for similar items in EconPapers)
JEL-codes: J14 J22 J26 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2021-12
New Economics Papers: this item is included in nep-age, nep-eur, nep-law and nep-lma
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