Re-examining female labor supply responses to the 1994 Australian pension reform

Abstract

Many governments are aiming to extend working lives by raising the age at which people can claim retirement pensions. This makes it vital to understand how these policies affect retirement decisions. In this paper, I revisit the labor supply effects of a major Australian reform that increased women’s pension age from 60 to 65. Atalay and Barrett (2015) studied these effects using repeated household surveys and a differences-in-differences design in which male cohorts form the comparison group. They estimate that the reform increased female labor force participation by 12 percentage points. Using earlier data, I show that the parallel-trends assumption did not hold before the reform because of a strong female-specific trend in participation rates across the relevant cohorts. Accounting for this trend, the estimated effect on female participation falls by two-thirds and becomes statistically insignificant at conventional levels. This highlights the importance of carefully assessing and controlling for trends across cohorts when evaluating pension reforms, which are typically phased in across cohorts.

Reforms of an Early Retirement Pathway in Germany and Their Labor Market Effects

“…However, we focus our analysis on treatment effects using a full DIDID model; thus, in our analysis identical time trends for male and female birth cohorts are not required as long as age-specific trends agree. Therefore our analysis is robust to the issues pointed out by Morris (2021). Also, while in the Australian pension program changes in labor force participation do not yield accrual effects on social security wealth and benefit receipt is means tested, we consider a more traditional retirement insurance with accrual and without means tests.…”

“…In a review of the Atalay and Barrett (2015) analysis, Morris (2021) points out that after controlling for diverging time trends in the treatment and control groups the effect declines in size and turns insignificant. As Atalay and Barrett (2015), we identify the causal effect comparing males and females.…”

Reforms of an early retirement pathway in Germany and their labor market effects

“…However, we focus our analysis on treatment effects using a full DIDID model; thus, in our analysis identical time trends for male and female birth cohorts are not required as long as age-specific trends agree. Therefore our analysis is robust to the issues pointed out by Morris (2022). Also, while in the Australian pension program changes in labor force participation do not yield accrual effects on social security wealth and benefit receipt is means tested, we consider a more traditional retirement insurance with accrual and without means tests.…”

“…In addition, they present their DID estimates separately by age following Mastrobuoni (2009), but without specifying a full DIDID model. In a review of the Atalay and Barrett (2015) analysis, Morris (2022) points out that after controlling for diverging time trends in the treatment and control groups the 1 This research is also related to studies of the causal effect of changes in the attractiveness of unemployment insurance (UI) transfers (e.g., Inderbitzin et al, 2016;Kuhn et al, 2020;Riphahn and Schrader, 2020). Inderbitzin et al (2016) point out that more generous UI benefits can increase early retirement and modify the utilization of different pathways to retirement.…”

Longer Careers: A Barrier to Hiring and Coworker Advancement?

“…2 This literature includes many studies estimating the employment impacts of early and full retirement age thresholds (Börsch-Supan and Schnabel, 1998;Mastrobuoni, 2009;Staubli and Zweimüller, 2013;Behaghel and Blau, 2012;Atalay and Barrett, 2015;Hernaes et al, 2016;Manoli and Weber, 2018;Atav et al, forthcoming;Lalive et al, 2021;Seibold, 2021;Geyer and Welteke, 2021;Morris, 2022a;Nakazawa, 2022;Morris, 2022b). Several studies have also estimated the effects of changes in retirement benefits (Krueger and Pischke, 1992;Lindeboom and Montizaan, 2020;Ye, 2022), earnings tests (Friedberg, 2000;Gelber et al, 2021;Gelber et al, 2022), or exploited age-specific eligibility criteria/benefit levels within Disability Insurance or Unemployment Insurance schemes (Staubli, 2011;Inderbitzin et al, 2016).…”