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Early Retirement Behaviour in the Netherlands: Evidence From a Policy Reform

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Summary

In the early 1990s the Dutch labour unions and employer organisations agreed to transform the generous and actuarially unfair early retirement (ER) schemes into less generous and actuarially fair schemes that reward individuals for postponing retirement. The starting dates of these new ER programs varied by industry sector. In this study, we exploit this variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989–2000, to estimate hazard rate models for the retirement age. We conclude that the policy reform has indeed induced workers to postpone retirement. Both the wealth effect (lower ER wealth) and the substitution effect (lower implicit taxes on retirement postponement) are significant, the latter being more substantial.

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Authors and Affiliations

  1. CPB Netherlands Bureau for Economic Policy Analysis, P.O. Box 80510, 2508 GM, The Hague, The Netherlands

    Rob Euwals & Daniel van Vuuren

  2. Department of Economics, University of Chicago, 1126 E. 59th Street, Chicago, IL, 60637, USA

    Ronald Wolthoff

Authors
  1. Rob Euwals
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  2. Daniel van Vuuren
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  3. Ronald Wolthoff
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Correspondence to Ronald Wolthoff.

Additional information

The authors thank Arthur van Soest, Marcel Kerkhofs, Bernd Fitzenberger, Peter Kooiman, Maarten Lindeboom, Sumedha Gupta, Arie Kapteyn, Gerard van den Berg, Martijn van de Ven, Jaap Abbring, an anonymous referee and participants of several seminars and conferences for valuable comments and discussions. The provision of data by Statistics Netherlands is acknowledged.

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Euwals, R., van Vuuren, D. & Wolthoff, R. Early Retirement Behaviour in the Netherlands: Evidence From a Policy Reform. De Economist 158, 209–236 (2010). https://doi.org/10.1007/s10645-010-9139-0

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