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Article
Publication date: 15 June 2020

Filip Pertold and Lenka Lakotova

In this paper, the authors analyse a 2010 legal reform in the Czech Republic, which allowed retirees to simultaneously receive regular pension benefits and to work on a…

Abstract

Purpose

In this paper, the authors analyse a 2010 legal reform in the Czech Republic, which allowed retirees to simultaneously receive regular pension benefits and to work on a permanent contract for a period longer than one year. Previously, concurrence of employment and receipt of retirement benefits were only allowed in conjunction with a temporary work contract with a maximum duration of one year.

Design/methodology/approach

The authors employ the difference-in-differences method. The authors include only males in the analysis because it is not possible to identify the legal retirement age for women from available data. Men in the workforce 1–3 years prior to the statutory retirement age are in a control group, while men 1–3 years older are in a treatment group.

Findings

The authors show that the reform significantly increased the share of permanent contracts held by retirees (by 22.5–27.6 percentage points), though we do not find any aggregate short-term change in employment of retirees. Heterogeneity analysis shows a significant increase in the employment of retirees with only elementary school education (by 17.9 percentage points) and a significant decrease in the number of hours worked by retirees (by 2.5 h weekly for low-educated workers).

Practical implications

The policy conclusion is that the regulation of employment contract does not affect aggregate employment, but may improve employment of low skilled workers.

Originality/value

To the authors’ best knowledge, there are no studies directly analysing motivation of retirees by types of employment contracts. The authors, thus, add to the literature that studies dealing with the general fixed-term versus permanent contracts (Engellandt and Riphahn, 2003) and motivation to work.

Details

International Journal of Manpower, vol. 41 no. 5
Type: Research Article
ISSN: 0143-7720

Keywords

Content available
Article
Publication date: 16 April 2018

Pierre Rostan and Alexandra Rostan

The purpose of this paper is to answer the following two questions: Will Saudi Arabia get older? Will its pension system be sustainable?

Abstract

Purpose

The purpose of this paper is to answer the following two questions: Will Saudi Arabia get older? Will its pension system be sustainable?

Design/methodology/approach

The methodology/approach is to forecast KSA’s population with wavelet analysis combined with the Burg model which fits a pth order autoregressive model to the input signal by minimizing (least squares) the forward and backward prediction errors while constraining the autoregressive parameters to satisfy the Levinson-Durbin recursion, then relies on an infinite impulse response prediction error filter.

Findings

Spectral analysis projections of Saudi age groups are more optimistic than the Bayesian probabilistic model sponsored by the United Nations Population Division: Saudi Arabia will not get older as fast as projected by the United Nations model. The KSA’s pension system will stay sustainable based on spectral analysis, whereas it will not based on the U.N. model.

Originality/value

Spectral analysis will provide better insight and understanding of population dynamics for Saudi government policymakers, as well as economic, health and pension planners.

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Article
Publication date: 4 February 2019

Oliwia Komada, Pawel Strzelecki and Joanna Tyrowicz

The purpose of this paper is to isolate and evaluate the causal effect of the changes in eligibility criteria on labor force participation (LFP) and exit to retirement of…

Abstract

Purpose

The purpose of this paper is to isolate and evaluate the causal effect of the changes in eligibility criteria on labor force participation (LFP) and exit to retirement of the cohorts affected by the reform that canceled most of the early pensions in Poland in 2009. At the individual level the reform created a huge discontinuity in treatment of different generations.

Design/methodology/approach

The authors rely on Polish Labor Force Survey and employ regression discontinuity design to evaluate the change in participation subsequent to the eligibility reform among the treated cohorts.

Findings

The authors find a statistically significant, but economically small discontinuity at the timing of the reform. The placebo test shows no similar effects in earlier or later quarters. Yet, the pure treatment effects are insignificant in vast majority of the specifications.

Research limitations/implications

There are some limitations of the data used in the research. It does not cover total population and some panel attrition can be expected. Authors also needed to cope with the lack of required details in survey questions. The main limitation of the method lies in the measurement of the immediate (short-term) effects while in many cases people require more time that 1–2 quarters for the decision after policy change.

Practical implications

The reduction of outflows to retirement was much less pronounced than could have been expected, largely due to already relatively lower propensity to retire early.

Social implications

There are two main policy implications of the study. First, constraining the pension eligibility criteria for retirement are frequently opposed by social actors. It is often considered that early retirement is a privilege – awarded on a basis of occupation or even simply employment in an industry. In many countries – e.g. France, Italy, Germany – attempts to make the eligibility criteria more strict resulted in general strikes and Poland was no exception from this rule. If treatment effects of the large and radical eligibility reform are small in participation rates and pension take-up rates, then immediate fiscal effects are bound to be small as well, even if in the desirable direction. This may explain why – given the strong social resistance – in many countries eligibility reforms are delayed or narrowed in scope. Second, the economic rationale for strong social resistance to eligibility reforms builds on assuming either a relatively high valuation of leisure time after exiting the labor market or a relatively high subjective valuation of the unemployment risk after passing the early retirement age threshold. If leisure preference is overstated, reducing eligibility may be opposed as such, but eligibility alone is irrelevant for household decision making. Meanwhile, unemployment risk may be mitigated via alternative instruments, such as employment protection legislation, as is the case in Poland. Depending on a specific composition of the two factors in a given country, the effects of the eligibility reforms may be as high as in Switzerland or as low as in Poland.

Originality/value

First, the authors provide an analysis of discontinuities in transitions from activity to retirement, rather than focusing on the labor market status. The panel dimension of the data permits to observe directly the flows into retirement/inactivity, controlling for age and birth cohort. Second, the authors complement a pure discontinuity in cohort analysis with a fuzzy design, because in addition to age eligibility the authors also analyze the effects of changes in occupational eligibility. Third, the authors provide a benchmark for the estimates in the actual quarter of the reform by a series of placebo and conditional specifications. This allows to evaluate the (immediate) size and heterogeneity of the treatment effects. The authors find small effects of age eligibility reduction and effectively no effects of occupational eligibility. Hence, increased LFP of the elderly, observed even prior to the reform, seems to be driven by factors unrelated to early pension eligibility.

Details

International Journal of Manpower, vol. 40 no. 2
Type: Research Article
ISSN: 0143-7720

Keywords

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Article
Publication date: 3 April 2017

Mareva Sabatier and Bérangère Legendre

The purpose of this paper is to investigate the extent to which the distance to retirement affects low employment rates among European older workers, taking into account a…

Abstract

Purpose

The purpose of this paper is to investigate the extent to which the distance to retirement affects low employment rates among European older workers, taking into account a key but often neglected determinant: health status.

Design/methodology/approach

To begin, the study amends McCall’s job search model, in which the job search behavior is treated as age dependent. Agents are heterogeneous according to two attributes: distance to retirement and health. The authors complete this theoretical analysis with an econometric analysis based on a French survey.

Findings

This model leads to clear predictions, such that the closer the retirement, the greater the reservation wage and the lower people’s search effort. Older workers also exhibit lower exit rates from unemployment, an effect that gets enhanced by health problems. The empirical work, based on a French survey, confirms the existence of a distance effect but also puts the greater impact of health status into perspective. The distance effect explains only part of the puzzle of older workers’ employment.

Originality/value

This paper proposes a theoretical and empirical analysis of the retirement decisions. It studies the distance effect but taking into account a neglected factor in the literature: health. Results clearly confirm the distance effect but highlight the reader role of health in retirement decisions.

Details

International Journal of Manpower, vol. 38 no. 1
Type: Research Article
ISSN: 0143-7720

Keywords

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Article
Publication date: 29 April 2021

Osvaldo García Mata

The purpose of this paper is to analyze financial literacy's effect on retirement planning among young adults in Mexico, with gender as a moderator variable. Planning…

Abstract

Purpose

The purpose of this paper is to analyze financial literacy's effect on retirement planning among young adults in Mexico, with gender as a moderator variable. Planning refers to the actual or intended implementation of several retirement strategies: private pension funds, investing in assets, government subsidies and family assistance.

Design/methodology/approach

The article's methodology is quantitative, empirical and cross-sectional. Ajzen's theory of planned behavior (1991) works as the theoretical framework to examine planning for retirement intentions determined by individuals' financial inclusion, attitudes, knowledge, behavior, occupation and family traits. The methodology follows generalized structural equation models (GSEM) with logistic regression basis, constructed with data from the National Survey on Financial Inclusion 2018.

Findings

Results confirm that the most financially knowledgeable individuals have lesser intentions to pursue passive strategies, while financial behavior and inclusion associate with actively planning. Gender plays a fundamental role in retirement planning too.

Research limitations/implications

Observations for several years are necessary to effectuate longitudinal analysis. Further research should include a more in-depth study of strategy choice triggers and policy impact on retirement planning.

Social implications

Findings can be useful to public and private institutions focused on saving, investment and retirement, especially in economies comparable to Mexico's. Avoiding the higher social costs associated with poor retirement planning depends on timely decision-making.

Originality/value

This study goes beyond the traditional pension fund strategy to analyze other options. It delivers information about young people's long-term financial plans in Mexico concerning financial literacy and gender.

Details

International Journal of Bank Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0265-2323

Keywords

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Book part
Publication date: 10 November 2014

Alan L. Gustman and Thomas L. Steinmeier

This paper advances the specification and estimation of econometric models of retirement and saving in two earner families. The complications introduced by the interaction…

Abstract

This paper advances the specification and estimation of econometric models of retirement and saving in two earner families. The complications introduced by the interaction of retirement decisions by husbands and wives have led researchers to adopt a number of simplifications. Our analysis relaxes these restrictions. The model includes three labor market states, full-time work, partial retirement, and full retirement; reverse flows from states of lesser to greater work; an extended choice set created when spouses make independent retirement decisions; heterogeneity in time preference; varying taste parameters for full-time and part-time work; and the possibility of changes in preferences after retirement.

Details

Factors Affecting Worker Well-being: The Impact of Change in the Labor Market
Type: Book
ISBN: 978-1-78441-150-3

Keywords

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Book part
Publication date: 6 August 2018

Alan L. Gustman and Thomas L. Steinmeier

A dynamic model of the evolution of health for those over the age of 50 is embedded in a structural, econometric model of retirement and saving. Effects of smoking…

Abstract

A dynamic model of the evolution of health for those over the age of 50 is embedded in a structural, econometric model of retirement and saving. Effects of smoking, obesity, alcohol consumption, depression, and other proclivities on medical conditions are analyzed, including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems, and arthritis. Compared to a population in good health, the current health of the population reduces retirement age by about one year. Including detailed health dynamics in a retirement model does not influence estimates of the marginal effects of economic incentives on retirement.

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Article
Publication date: 20 February 2019

Paola Bongini and Doriana Cucinelli

The purpose of this paper is to investigate the main predictors of university students’ intention to invest in a pension fund: an understanding of how young people…

Abstract

Purpose

The purpose of this paper is to investigate the main predictors of university students’ intention to invest in a pension fund: an understanding of how young people perceive retirement planning is relevant for its policy implications.

Design/methodology/approach

The authors apply the theory of planned behaviour (TPB) proposed by Ajzen (1985) which explains how human behaviour is guided, and provides a framework to explore the underlying beliefs that affect one’s behaviours.

Findings

The evidence on a sample of Italian university students highlights that the TPB predictors, pension knowledge, money management and the highest level of financial literacy, positively influence their intention to invest in a pension fund.

Research limitations/implications

Although the authors are aware of the limitations of the analysis (limited to a specific country and to a specific financial product), the authors believe that the study has the merit of offering a number of ideas for further research. In fact, there are few contributions in the literature that identify the intention of young people to save for retirement. The study sheds light on this important issue. However, because it is limited to Italian university students, its findings cannot be generalised.

Practical implications

The study can be used by regulators, financial educators, counsellors and public institutions to increase the propensity of young people to plan for their future and guide them towards attitudes and behaviours most likely to increase their savings for retirement.

Social implications

The evidence suggests that regulators, institutions and educators should improve the information that is provided to families first and to the younger generations – at school, for instance – about the functioning of the pension system. The survey’s findings emphasise that university students are generally unaware of the many reforms to the system while believing that their state pensions will be sufficient to maintain a retirement standard of living that is the same as the standard of living achieved during their working lives.

Originality/value

In the authors’ knowledge, there are not studies that focus on the youngs’ intention to invest in a pension fund. The authors believe that millennials are the most hitted by the Fornero’s reform and understand which predictors affect this intention can allow to drive the decision in investing in these important financial tools.

Details

International Journal of Bank Marketing, vol. 37 no. 3
Type: Research Article
ISSN: 0265-2323

Keywords

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Article
Publication date: 8 May 2017

Pedro Rodrigues de Oliveira, Ana Lúcia Kassouf and Juliana Maria de Aquino

The purpose of this paper is to present evidences on the spillover effects of a cash transfer addressed to poor elders in Brazil.

Abstract

Purpose

The purpose of this paper is to present evidences on the spillover effects of a cash transfer addressed to poor elders in Brazil.

Design/methodology/approach

Using the Brazilian National Households Survey (PNAD) the authors assess the effects of an income transfer to the elders on household composition and the labor supply of elders and co-residing relatives, under a regression discontinuity design.

Findings

The authors do not find strong evidences of changes in the household composition due to the program. However the authors found reductions in the elders’ labor force participation, indicating that the program allow elders to retire. Moreover, the transfer yields a decrease in the labor force participation of co-residents, depending on their age. The authors also observe decreases in child labor.

Originality/value

Along with the cash comes context-dependent effects, showing there are many latent aspects of these transfers yet to be uncovered.

Details

Journal of Economic Studies, vol. 44 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

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Article
Publication date: 3 April 2018

Hyunjoon Lim

The purpose of this paper is to evaluate the effect of veteran status on civilian wages and on retirement age through employing individual-level data.

Abstract

Purpose

The purpose of this paper is to evaluate the effect of veteran status on civilian wages and on retirement age through employing individual-level data.

Design/methodology/approach

Instrumental variable (IV) estimation specifications show that, contrary to public perception, veteran status has a statistically significant positive impact on an individual’s civilian wage and thus helps him retire earlier than his non-veteran counterpart.

Findings

Moreover, the wage premium effect largely holds for less-educated men; however, for highly educated men, military service has adverse effects on their subsequent wages, and thus, on their retirement age. In line with this result, the effects of veteran status on retirement age largely hold for the relatively less-educated group.

Originality/value

This is the first finding to shed light on the link between veteran status and the decision to retire. This work is also first attempt to explore relationship between compulsory military service and subsequent civilian labor market performance, using the Korean individual-level data via relevant IV estimation methodology.

Details

International Journal of Manpower, vol. 39 no. 1
Type: Research Article
ISSN: 0143-7720

Keywords

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