Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97204
Authors: 
Jürges, Hendrik
Thiel, Lars
Bucher-Koenen, Tabea
Rausch, Johannes
Schuth, Morten
Börsch-Supan, Axel
Year of Publication: 
2014
Series/Report no.: 
Schumpeter Discussion Papers 2014-003
Abstract: 
About 20% of German workers retire on disability pensions. Disability pensions provide fairly generous benefits for those who are not already age-eligible for an old-age pension and who are deemed unable to work for health reasons. In this paper, we use two sets of individual survey data to study the role of health and financial incentives in early retirement decisions in Germany, in particular disability benefit uptake. We show that financial incentives to retire do affect sick individuals at least as much as healthy individuals. Based on 25 years of individual survey data and empirical models of retirement behavior, we then simulate changes in the generosity of disability pensions to understand how these changes would affect retirement behavior. Our results show that making the disability benefit award process more stringent without closing other early retirement routes would not greatly increase labor force participation in old age.
JEL: 
H55
J14
J26
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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