Nonparametric Evidence On The Effects Of Financial Incentives On Retirement Decisions
This paper presents new empirical evidence on the effects of retirement benefits on labor force participation decisions. The authors use administrative data on the census of private sector employees in Austria and variation from mandated discontinuous changes in retirement benefits from the Austrian pension system. They present graphical evidence documenting labor supply responses to the policy discontinuities. Next, they develop nonparametric procedures to estimate labor supply elasticities based on the graphical evidence and mandated financial incentives. They estimate elasticities of 0.12 for men and 0.38 for women. These relatively low elasticities highlight that many retirement decisions are likely to be affected by factors beyond only financial incentives from retirement benefits.