Polanec, Sašo and Ahčan, Aleš and Verbič, Miroslav (2010): Retirement Decisions in Transition: Microeconometric Evidence from Slovenia.
Download (309Kb) | Preview
In this article, we analyse old-age retirement decisions of Slovenian men and women, eligible to retire in the period 1997-2003. In comparison to established market economies, we find relatively high hazard rates of retirement that decline with age. This unusual pattern can partly be attributed to weak incentives to work, inherent in the design of the pension system and reflected in predominantly negative values of accruals, and to transition-specific increase in wage inequality in the late 1980s and early 1990s. This is reflected in low wages and relatively high pensions of less productive (skilled) workers and vice versa. We find that the probability of retirement decreases with option value to work and net wages, although the response to the former, when controlling for the latter, is rather weak. Our results also imply that less educated individuals and individuals with greater personal wealth are more likely to retire.
|Item Type:||MPRA Paper|
|Original Title:||Retirement Decisions in Transition: Microeconometric Evidence from Slovenia|
|English Title:||Retirement Decisions in Transition: Microeconometric Evidence from Slovenia|
|Keywords:||option value; retirement decisions; transition|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J26 - Retirement; Retirement Policies
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J20 - General
|Depositing User:||Miroslav Verbic|
|Date Deposited:||05. Feb 2011 16:13|
|Last Modified:||12. Feb 2013 11:12|
Antolin, P. and Scarpetta, S. (1998). ‘Microeconometric Analysis of the Retirement Decision: Germany’, OECD Economics Department Working Papers No. 204, Organisation for Economic Co-operation and Development (OECD), Paris.
Atkinson, M. E. and Creedy, J. (1996). ‘Modelling Optimal Retirement Decisions in Australia’, Australian Economic Papers, 35, pp. 39-59.
Attanasio, O. P. and Weber, G. (2010). ‘Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy’, Journal of Economic Literature, 48, 3, pp. 693-751.
Berg, A. and Blanchard, O. (1994). ‘Stabilization and Transition in Poland, 1990-1991’, in Blanchard, O., Froot K. and Sachs, J. (eds.), The Transition in Eastern Europe, Volume 1, Chicago: National Bureau for Economic Research & University of Chicago Press pp. 51-92.
Berkel, B. and Börsch-Supan, A. (2004). ‘Pension Reform in Germany: The Impact on Retirement Decisions’, Finanzarchiv, 60, 3, pp. 393-421.
Blau, D. M. (1994). ‘Labor Force Dynamics of Older Men’, Econometrica, 62, 1, pp. 117-156.
Blöndal, S. and Scarpetta, S. (1997). ‘Early Retirement in OECD Countries: The Role of Social Security Systems’, Economic Studies No. 29, Organisation for Economic Co-operation and Development (OECD), Paris.
Boeri, T. (2000). Structural Change, Reallocation and Income Support. Oxford, UK: Oxford University Press.
Boeri, T. and Terrell, K. (2002). ‘Institutional Determinants of Labor Reallocation in Transition’, Journal of Economic Perspectives, 16, pp. 51-76.
Campos, N. F. and Jolliffe, D. (2003). ‘After, Before and During: Returns to Education in Hungary (1986-1998)’, Economic Systems, 27, pp. 377-390.
Coile, C. C. and Gruber, J. (2000). ‘Social Security and Retirement’, CRR Working Papers No. 11, Center for Retirement Research at Boston College, Chestnut Hill, MA.
Coile, C. C. and Gruber, J. (2001). ‘Social Security Incentives for Retirement’, in Wise, D. A. (ed.), Themes in the Economics of Aging, Chicago: University of Chicago Press, pp. 311-354.
Coile, C. C. and Gruber, J. (2004). ‘The Effect of Social Security on Retirement in the United States’, in Gruber, J. and Wise, D. A. (eds.), Social Security Programs and Retirement around the World: Micro Estimation, Chicago: University of Chicago Press, pp. 691-730.
EU Commission (2006). ‘The Impact of Ageing on Public Expenditure: Projections for the EU25 Member States on Pensions, Health Care, Longterm Care, Education and Unemployment Transfers (2004-2050)’, European Economy; Special Report No. 1, European Communities Commission Directorate-General for Economic and Financial Affairs, Brussels.
Eurostat (2010). Eurostat Databases. Luxembourg: Statistical Office of the European Communities. Available from: http://epp.eurostat.ec.europa.eu.
Fields, G. S. and Mitchell, O. S. (1984). ‘Economic Determinants of the Optimal Retirement Age: An Empirical Investigation’, Journal of Human Resources, 19, 2, pp. 245-262.
Galuščák, K. (2001). ‘Retirement Decisions of Older Czech Male Workers’, CERGE-EI Working Paper Series No. 190, CERGE-EI, Prague.
Gomulka, S. (1992). ‘The Causes of Recession Following Stabilisation’, Comparative Economic Studies, 33, pp. 71-89.
Gregorič, A., Polanec, S. and Slapničar, S. (2010). ‘Pay me Right: Reference Values and Executive Compensation’, European Financial Management, 16, 5, pp. 778-804.
Gruber, J. and Wise, D. A. (2004). ‘Introduction and Summary’, in Gruber, J. and Wise, D.A. (eds.), Social Security Programs and Retirement around the World: Micro Estimation, Chicago: University of Chicago Press, pp. 1-40.
Hausman, J. A. and Wise, D. A. (1985). ‘Social Security, Health Status, and Retirement’, in Wise, D. A. (ed.), Pensions, Labor, and Individual Choice, Chicago: University of Chicago Press, pp. 159-191.
Kornai, J. (1994). ‘Transformational Recession: The Main Causes’, Journal of Comparative Economics, 19, pp. 39-63.
Lindeboom, M. (1998). ‘Microeconometric Analysis of the Retirement Decision: The Netherlands’, OECD Ageing Working Papers No. 1.9, Organisation for Economic Co-operation and Development (OECD), Paris.
Micklewright, J. (2000). ‘Education, Inequality and Transition’, Innocenti Working Papers; Economic and Social Policy Series No. 74, UNICEF Innocenti Research Centre, Florence.
Miniaci, R. (1998). ‘Microeconometric Analysis of the Retirement Decision: Italy’, OECD Economics Department Working Papers No. 205, Organisation for Economic Co-operation and Development (OECD), Paris.
Milanovic, B. (1999). ‘Explaining the Increase in Inequality during Transition’, World Bank Policy Research Working Papers No. 1935, World Bank, Washington, DC.
Mitra, P. and Yemtsov, R. (2006). ‘Increasing Inequality in Transition: Is There More to Come?’, World Bank Policy Research Papers No. 4007, World Bank, Washington, DC.
Newell, A. and Reilly, B. (1999). ‘Rates of Return to Educational Qualifications in the Transitional Economies’, Education Economics, 7, 1, pp. 67-84.
Orazem, P. F. and Vodopivec, M. (1995). ‘Winners and Losers in Transition: Returns to Education, Experience and Gender in Slovenia’, World Bank Economic Review, 9, 2, pp. 201-230.
Orazem, P. F. and Vodopivec, M. (1997). ‘Value of Human Capital in Transition to Market: Evidence from Slovenia’, European Economic Review, 41, pp. 893-903.
Piekolla, H. (2004). ‘Retirement Decisions and Option Values: Their Application Regarding Finland, Belgium and Germany’, ETLA Discussion Papers No. 951, The Research Institute of the Finnish Economy (ETLA), Helsinki.
Rosati, D. K., 1994. ‘Output Decline During Transition from Plan to Market’, Economics of Transition, 2, pp. 419-442.
Rust, J. and Phelan, C. (1997). ‘How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets’, Econometrica, 65, 4, pp. 781-831.
Stock, J. H. and Wise, D. A. (1990). ‘Pensions, the Option Value to Work, and Retirement’, Econometrica, 58, 5, pp. 1151-1180.
Verbič, M., Majcen, B. and van Nieuwkoop, R. (2006). ‘Sustainability of the Slovenian Pension System: An Analysis with an Overlapping-generations General Equilibrium Model’, Eastern European Economics, 44, 4, pp. 60-81.
Verbič, M. (2007). ‘Varying the Parameters of the Slovenian Pension System: An Analysis with an Overlapping-Generations General Equilibrium Model’, Post-Communist Economies, 19, 4, pp. 449-470.