Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

Inderbitzin, Lukas; Staubli, Stefan; Zweimüller, Josef

doi:10.2139/ssrn.2255990

Cited by 54 publications

(64 citation statements)

References 58 publications

(75 reference statements)

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“…Hence di↵erential incentives exist during ages 50-52. Inderbitzin et al (2016) show that, indeed early retirements without DI in the age group 50-52 increased very strongly, while there are no such di↵erences from age 53 and higher.…”

Section: Figurementioning

confidence: 74%

“…We can again use the Austrian REBP as a quasiexperiment to study the interaction of the UI system with other welfare programs, in particular the DI system (Inderbitzin, Staubli, Zweimüller 2016). As we will see, the REBP triggered not only "program substitution" -lower takeup of DI benefits together with higher UI takeup -but also "program complementarity", a consecutive take-up of UI and DI benefits.…”

Section: Program Substitution? Ui and Other Benefitsmentioning

confidence: 99%

“…The firm o↵ers the workers a job package that includes the wage and a probability of being laid o↵. With more generous UI 16 For details on the calculation of total additional costs to the government, see Inderbitzin et al (2016).…”

Section: Ui Generosity and Job Separationsmentioning

confidence: 99%

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Unemployment insurance and the labor market

Zweimüller

2018

Labour Economics

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The existing literature assumes that unemployment insurance (UI) a↵ects the labor market through the job finding rate of eligible workers. I argue that this focus is too narrow. I show evidence for UI e↵ects through three other margins: (i) search externalities; (ii) takeup of other welfare state programs; and (iii) job separations. This suggests that the analysis of optimal UI should take a more comprehensive view of how UI a↵ects the labor market.Keywords: Unemployment insurance, extended benefits, unemployment duration, unemployment inflow, layo↵s, disability insurance, optimal benefits. JEL Codes: J65, J63, J64. * Address: University of Zurich, CH-8000 Zurich, Switzerland; email josef.zweimueller@econ.uzh.ch. This paper was written for the Adam Smith Lecture at EALE 2017, St.Gallen, Switzerland. I want to thank the organizers for inviting me to give this lecture and for the opportunity to present my work in front of this great audience. The research discussed here would not have happened without the energy and enthusiasm of my co-authors. First and foremost, I am indebted to my long-term collaborator Rafael Lalive, who provided invaluable input for this research. With him I started working on the universe of the Austrian social security data (ASSD) in the late 1990s, a data set that many other researchers are using now. Special thanks go to Stefan Staubli with whom I have enjoyed working over the last years and whose expertise and work attitude were of tremendous help in all our projects. The research discussed here benefitted from the energetic input of Camille Landais, who initiated the market externality project. I am indebted to Lukas Inderbitzin who co-authored the paper on program substitution. The paper on UI and job separations is work in progress and I have the pleasure to work with Simon Jäger and Benjamin Schoefer on this project. Over the years, I could rely on the support of engaged and talented research assistants. Particular thanks go to Andreas Kettemann and Philippe Ruh, who were extremely helpful over the last years and who provided decisive input for the empirical evidence presented here. Thanks also to Damian Osterwalder and Dominik Eglo↵ for putting together the tables and graphs of the paper. I also thank Andreas Steinhauer and Andreas Haller for comments on an earlier version of this paper and Johanna Posch for checking the final version.

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Section: Figurementioning

confidence: 74%

Section: Program Substitution? Ui and Other Benefitsmentioning

confidence: 99%

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Unemployment insurance and the labor market

Zweimüller

2018

Labour Economics

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“…Increasing the ERA implies that the choice set of older workers is reduced and that the employment reaction of those who would have chosen to retire depends on the relative attractiveness of the remaining options. There is a large literature that analyzing program substitution e ects in the context of pension reforms (e.g., Duggan et al, 2007;Karlström et al, 2008;Li and Maestas, 2008;Coe and Haverstick, 2010;Staubli, 2011;Staubli and Zweimüller, 2013;Borghans et al, 2014;Atalay and Barrett, 2015;Inderbitzin et al, 2016). However, the existing evidence on the e ectiveness of increasing the ERA and program substitution is mixed.…”

Section: Introductionmentioning

confidence: 99%

Closing Routes to Retirement: How Do People Respond?

Geyer

Welteke

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We present quasi-experimental evidence on the employment e ects of an unprecedented large increase in the early retirement age (ERA). Raising the ERA has the potential to extend contribution periods and to reduce the number of pension bene ciaries at the same time, if employment exits are successfully delayed. However, workers may not be able to work longer or may choose other social support programs as exit routes from employment. We study the e ects of the ERA increase on employment and potential program substitution in a regression-discontinuity framework. Germany abolished an important early retirement program for women born after 1951, e ectively raising the ERA for women by three years. We analyze the e ects of this huge increase on employment, unemployment, disability pensions, and inactivity rates. Our results suggest that the reform increased both employment and unemployment rates of women age 60 and over. However, we do not nd evidence for active program substitution from employment into alternative social support programs. Instead employed women remained employed and unemployed women remained unemployed. The results suggest an increase in inequality within the a ected cohorts. Terms of use: Documents in

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“…Staubli, 2011;Inderbitzin et al, 2016) and to studies that analyze the effect of an increase in early retirement age (ERA) or NRA on actual retirement age (e.g. Duggan et al, 2007;Li and Maestas, 2008;Staubli and Zweimüller, 2013;Atalay and Barrett, 2015;Geyer and Welteke, 2017).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Partial Retirement on Labor Supply, Public Balances and the Income Distribution: Evidence from a Structural Analysis

Tolan

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in August 2017Abstract This paper develops a structural dynamic retirement model to investigate effects and corresponding underlying mechanisms of a partial retirement program on labor supply, fiscal balances, and the pension income distribution. The structural approach allows for disentangling the two counteracting mechanisms that drive the employment effects of partial retirement: 1) the crowding-out from full-time employment, and 2) the movement from early retirement or unemployment to partial retirement. It also allows for investigating the role of financial compensations in a partial retirement program. Based on a unique German administrative dataset, I perform counterfactual policy simulations that analyze the role of partial retirement combined with financial subsidies and an increased normal retirement age. The results show that partial retirement extends working lives but reduces the overall employment volume. The fiscal consequences of partial retirement are negative but substantially less so when wages and pensions in partial retirement remain uncompensated. Partial retirement decreases inequality in pension income and provides a way to smooth consumption especially for retirees in lower income deciles in the context of an increased normal retirement age.JEL: C61, J26, H55

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Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

Cited by 54 publications

References 58 publications

Unemployment insurance and the labor market

Unemployment insurance and the labor market

Closing Routes to Retirement: How Do People Respond?

The Effect of Partial Retirement on Labor Supply, Public Balances and the Income Distribution: Evidence from a Structural Analysis

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