New publication at the chair P&O

The paper “Early retirement of employees in demanding jobs: evidence from a German pension reform” by Mona Bruns, Johannes Geyer, Svenja Lorenz and Thomas Zwick (https://ftp.zew.de/pub/zew-docs/dp/dp21082.pdf) was accepted by the Journal of the Economics of Ageing.

The paper shows that the topical rules for early retirement in Germany hardly help employees in demanding jobs who are at risk of not reaching their regular retirement age in employment. An example of this group frequently used by politicians are roofers who spent many years in this job. To measure the effectiveness of the early retirement rules, we regard differences in labor market reactions of employees in low- and high-demand jobs from a pension reform that increased the early retirement age for women from 60 to 63 years. Surprisingly, we find the same relative employment increase of about 25% for treated women who were exposed to low and to high job demand. For older women in demanding jobs, we also do not find substitution effects into unemployment, partial retirement, disability pension, or inactivity. Eligibility for the abolished early retirement option required high labor market attachment – rules that are still in place for all early retirement options. Thus, we argue that the eligibility rule for early retirement such as the 45 years in employment needed for the old age pension for the particularly long-term insured employees induces a positive selection of healthy workers into early retirement. Its rationale therefore should be thought over. We instead propose a more generous design of disability pensions (Erwerbsminderungsrente) and hereby support the current initiative by Hubertus Heil, Federal Minister of Labour and Social Affairs. Disability pensions are the main bridge into pension for employees in demanding jobs who are unable to reach their statutory retirement age instead of the more generous early retirement options.