Can Policy Facilitate Partial Retirement? Evidence from Germany

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. In 1996, Germany introduced the Altersteilzeit (ATZ) law, which encouraged longer working lives through partial retirement incentives. Using matched pension system and establishment survey data, we estimate changes in part-time employment and retirement after ATZ. We find the policy induced growth in part-time work for men and extended men's expected duration of employment by 1.8 years. As the policy evolved to include an abrupt retirement option, the worklife gain for men fell to 1.2 years. Among women, part-time employment grew less and employment duration changed little initially but later declined by 0.2 years when abrupt retirement became available.JEL Classification: J26

The Effect of Partial Retirement on Labor Supply, Public Balances and the Income Distribution: Evidence from a Structural Analysis

“…Both studies distinguish between labor market exit and retirement entry since factual retirement can start earlier in Germany if individuals bridge the transition to retirement with unemployment insurance take-up. While Berg et al (2015) find an overall positive effect of ATZ on the average labor market exit age, the results by Huber et al (2016) are more modest. Moreover, Huber et al (2016) only find a significant positive effect for East Germany and no effect for West Germany, which they attribute to differences in labor market conditions between the regions.…”

“…Among ATZ providing firms, these agreements contained compensation floors of at least 20% of previous wages and 40% of previous pension points. The average compensation for wages among ATZ firms was 23% (Wanger, 2009) while pension point compensations ranged from 30-45% (Berg et al, 2015).…”

“…Graf et al (2011) analyze the Austrian old age part-time scheme that is institutionally very similar to the German partial retirement policy 'Altersteilzeit' (ATZ) and find a cumulative negative effect on employment over the five year duration of the program. The effects of the German ATZ policy are studied by Berg et al (2015) and Huber et al (2016). Both studies distinguish between labor market exit and retirement entry since factual retirement can start earlier in Germany if individuals bridge the transition to retirement with unemployment insurance take-up.…”

The association between self-reported health, late career transitions and working time modulations in England

“…Even though there is an extensive knowledge of these arrangements at policy level (Bluestone and Rose 1998;Andor 2012;Berg et al 2015;Dubois et al 2016) or at the workplace level (Lewis et al 2017;Wheatley 2017) The association between health and working time can be assessed in two different ways, looking either at the way working time is organized or at the working time as such. On the one hand, one can focus on the potential role played by work arrangements in improving workers' health and this implies to account for the potential control workers would have on their working time.…”

Working time reductions at the end of the career: Do they prolong the time spent in employment?

“…They attribute this differential finding to the difficult labour market conditions in East-Germany. Berg et al (2015) also evaluate the German partial retirement scheme, but based on a difference-in-differences strategy. They find that participation in the scheme prolongs the working career for men, but less so in periods of more intensive use of the block model.…”