Chapter

Micro-Modeling of Retirement Decisions in Germany

Axel Börsch-Supan, Reinhold Schnabel, Simone Kohnz and Giovanni Mastrobuoni

in Social Security Programs and Retirement around the World

Published by University of Chicago Press

Published in print March 2004 | ISBN: 9780226310183
Published online February 2013 | e-ISBN: 9780226309989 | DOI: http://dx.doi.org/10.7208/chicago/9780226309989.003.0006
Micro-Modeling of Retirement Decisions in Germany

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Germans retire early, with average retirement age about fifty-nine-and-a-half years, half a year younger than the earliest eligibility age for old-age pensions and more than five years younger than the “normal” retirement age in Germany. Early retirement is a well-appreciated social achievement among Germans, but it is costly. Since life expectancy at age sixty is about seventeen years, a year of early retirement corresponds to more than 5 percent of pension expenditures. This chapter, which presents a study that is part of a multistage research project on the causes for, and the effects of, early retirement, provides econometric evidence for the strength of the incentive effects to retire early, based on micro-data. It is organized as follows. Sections 5.2 and 5.3 describe the institutional background for private-sector and civil servants' pensions. Section 5.4 presents data and variable specifications; Section 5.5 provides estimation results; and Section 5.6 explores what these estimates mean, simulates a set of pension reform steps, and concludes.

Keywords: early retirement; retirement incentives; private-sector employees; civil servants; pensions

Chapter.  16146 words.  Illustrated.

Subjects: International Economics

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