Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis

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Abstract

Using data from a stated preferences experiment in the Netherlands, we find that replac- ing full-time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average. Total lifetime labour supply, however, decreases by 3.4 months, because the positive effect of delayed retirement on labour sup- ply is cancelled out by a reduction in working hours in the years before full retirement. The impact of gradual retirement schemes is, however, heterogeneous across groups of workers. Workers in bad health who gain access to gradual retirement postpone their re- tirement by 1.7 months more than workers in good health. This suggests that introduction of gradual retirement alleviates, to a certain extent, the health-related burden that employ- ees in poor health may experience in carrying out their work. Nevertheless, introduction of gradual retirement reduces the total labour supply of both groups of workers. Finan- cial incentives, either in terms of changing pension income or the price of leisure, also affect expected retirement age, but the impact of these financial incentives does not differ with the possibility of gradual retirement. Finally, we find that gradual retirement is not a preferred option among workers, as the large majority prefers full retirement.
Original languageEnglish
Pages (from-to)277-294
Number of pages18
JournalJournal of Economic Behavior & Organization
Volume150
DOIs
Publication statusPublished - Jun 2018

Keywords

  • gradual retirement
  • labour supply
  • financial incentives
  • stated preferences experiment
  • Labour supply
  • Stated preferences experiment
  • VIGNETTES
  • QUALITY
  • MARKET
  • Financial incentives
  • Gradual retirement
  • EMPLOYMENT
  • VALIDITY

Cite this

@article{591bc8c4f97746b58f8d32ffbd18ba5c,
title = "Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis",
abstract = "Using data from a stated preferences experiment in the Netherlands, we find that replac- ing full-time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average. Total lifetime labour supply, however, decreases by 3.4 months, because the positive effect of delayed retirement on labour sup- ply is cancelled out by a reduction in working hours in the years before full retirement. The impact of gradual retirement schemes is, however, heterogeneous across groups of workers. Workers in bad health who gain access to gradual retirement postpone their re- tirement by 1.7 months more than workers in good health. This suggests that introduction of gradual retirement alleviates, to a certain extent, the health-related burden that employ- ees in poor health may experience in carrying out their work. Nevertheless, introduction of gradual retirement reduces the total labour supply of both groups of workers. Finan- cial incentives, either in terms of changing pension income or the price of leisure, also affect expected retirement age, but the impact of these financial incentives does not differ with the possibility of gradual retirement. Finally, we find that gradual retirement is not a preferred option among workers, as the large majority prefers full retirement.",
keywords = "gradual retirement, labour supply, financial incentives, stated preferences experiment, Labour supply, Stated preferences experiment, VIGNETTES, QUALITY, MARKET, Financial incentives, Gradual retirement, EMPLOYMENT, VALIDITY",
author = "Ahmed Elsayed and {de Grip}, Andries and Didier Fouarge and Raymond Montizaan",
note = "Datasource: ROA Public Sector Survey 2015",
year = "2018",
month = "6",
doi = "10.1016/j.jebo.2018.01.012",
language = "English",
volume = "150",
pages = "277--294",
journal = "Journal of Economic Behavior & Organization",
issn = "0167-2681",
publisher = "Elsevier Science",

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T1 - Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis

AU - Elsayed, Ahmed

AU - de Grip, Andries

AU - Fouarge, Didier

AU - Montizaan, Raymond

N1 - Datasource: ROA Public Sector Survey 2015

PY - 2018/6

Y1 - 2018/6

N2 - Using data from a stated preferences experiment in the Netherlands, we find that replac- ing full-time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average. Total lifetime labour supply, however, decreases by 3.4 months, because the positive effect of delayed retirement on labour sup- ply is cancelled out by a reduction in working hours in the years before full retirement. The impact of gradual retirement schemes is, however, heterogeneous across groups of workers. Workers in bad health who gain access to gradual retirement postpone their re- tirement by 1.7 months more than workers in good health. This suggests that introduction of gradual retirement alleviates, to a certain extent, the health-related burden that employ- ees in poor health may experience in carrying out their work. Nevertheless, introduction of gradual retirement reduces the total labour supply of both groups of workers. Finan- cial incentives, either in terms of changing pension income or the price of leisure, also affect expected retirement age, but the impact of these financial incentives does not differ with the possibility of gradual retirement. Finally, we find that gradual retirement is not a preferred option among workers, as the large majority prefers full retirement.

AB - Using data from a stated preferences experiment in the Netherlands, we find that replac- ing full-time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average. Total lifetime labour supply, however, decreases by 3.4 months, because the positive effect of delayed retirement on labour sup- ply is cancelled out by a reduction in working hours in the years before full retirement. The impact of gradual retirement schemes is, however, heterogeneous across groups of workers. Workers in bad health who gain access to gradual retirement postpone their re- tirement by 1.7 months more than workers in good health. This suggests that introduction of gradual retirement alleviates, to a certain extent, the health-related burden that employ- ees in poor health may experience in carrying out their work. Nevertheless, introduction of gradual retirement reduces the total labour supply of both groups of workers. Finan- cial incentives, either in terms of changing pension income or the price of leisure, also affect expected retirement age, but the impact of these financial incentives does not differ with the possibility of gradual retirement. Finally, we find that gradual retirement is not a preferred option among workers, as the large majority prefers full retirement.

KW - gradual retirement

KW - labour supply

KW - financial incentives

KW - stated preferences experiment

KW - Labour supply

KW - Stated preferences experiment

KW - VIGNETTES

KW - QUALITY

KW - MARKET

KW - Financial incentives

KW - Gradual retirement

KW - EMPLOYMENT

KW - VALIDITY

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