Faculté des sciences économiques et sociales

The Effect of Firms' Phased Retirement Policies on the Labor Market Outcomes of Their Employees

Huber, Martin ; Lechner, Michael ; Wunsch, Conny

In: ILR review, 2016, vol. 69, no. 5, p. 1216-1248

In this article, the authors assess the impact of firms’ offering a special form of phased retirement on their male employees’ labor market outcomes. The program aims at smoothing the transition from work to retirement and at decreasing costs in the public pension and unemployment insurance schemes through an increase in employment of elderly workers who otherwise would have exited... More

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    Summary
    In this article, the authors assess the impact of firms’ offering a special form of phased retirement on their male employees’ labor market outcomes. The program aims at smoothing the transition from work to retirement and at decreasing costs in the public pension and unemployment insurance schemes through an increase in employment of elderly workers who otherwise would have exited prematurely through unemployment or early retirement. In line with these objectives, the authors assess whether male employees spend more time in employment and less time in unemployment or inactivity after the introduction of the program. The analysis is based on unique linked employer-employee data that combine high- quality survey and administrative data. Results suggest that phased retirement options offered by firms can help to reduce some of the public costs of low labor force attachment of elderly workers, mainly by reducing exits through unemployment and by increasing employment and earnings. Under relatively good labor market conditions, however, they may also encourage a small share of workers to exit the labor market earlier.