| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 972404 | Labour Economics | 2012 | 11 Pages |
We investigate the responsiveness of individual retirement decisions to changes in financial incentives. A reform increased women's normal retirement age (NRA) in two steps from age 62 to age 63 first and then to age 64. At the same time retirement at the previous NRA became possible at a benefit discount. Since the reform affected specific birth cohorts we can identify causal effects. We find strong and robust behavioral effects of changes in financial retirement incentives. A permanent reduction of retirement benefits by 3.4% induces a decline in the age-specific annual retirement probability by over 50%. The response to changes in financial retirement benefits varies with educational background: those with low education respond most strongly to an increase in the price of leisure.
► We study the response of retirement decisions to financial incentives. ► For identification we use a natural experiment. ► We find strong behavioral effects of changes in financial incentives. ► Those with low education respond most strongly. ► The response to the reform intensifies over time.
