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The Effect of Pension Wealth on Employment

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Sebastian Becker, Hermann Buslei, Johannes Geyer, Peter Haan

London: IFS, 2023, 49 S.
(IFS Working Papers ; 23/01)


This study provides novel evidence about the pension wealth elasticity of employment. For the identification we exploit reform-induced variation of pension wealth that is related to the number of children but which does not affect the implicit tax rate of employment. We use a difference-in-differences estimator based on administrative data from the German pension insurance and find that, on average, the negative employment effect of pension wealth is significant and economically important. Heterogeneity analyses document a strong age pattern showing that the employment effects are driven by behavioral responses of women close to retirement. The age pattern is partly explained by the positive effect of pension wealth on disability pensions after the age of 60.

Hermann Buslei

Research Associate in the Public Economics Department

Johannes Geyer

Deputy Head in the Public Economics Department

Peter Haan

Head of Department in the Public Economics Department

JEL-Classification: H55;J13;J21;J26
Keywords: Employment and income, Savings, pensions and wealth, Private pensions, Disability, Labour supply and workforce, Retirement, Wealth, Employment
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