Health, Financial Incentives, and Early Retirement: Micro-Simulation Evidence for Germany

Hendrik Juerges, Lars Thiel, Tabea Bucher-Koenen, Johannes Rausch, Morten Schuth and Axel Boersch-Supan

No 19889, NBER Working Papers from National Bureau of Economic Research, Inc

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)
Date: 2014-02
Note: AG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Health, Financial Incentives, and Early Retirement: Microsimulation Evidence for Germany , Hendrik Jürges, Lars Thiel, Tabea Bucher-Koenen, Johannes Rausch, Morten Schuth, Axel Börsch-Supan. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement , Wise. 2016

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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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