Peer effects and retirement decisions: evidence from pension reform in Germany
The ESRI organises a public seminar series, inviting researchers from both the ESRI and other institutions to present new research on a variety of public policy issues. The seminar series provides access to specialised knowledge and new research methodologies, with the objective of promoting research excellence and facilitating productive dialogue across the policy and research fields.
Seminar topic: We use employee-employer matched administrative data to estimate the impact of peers on retirement decisions. Using exogenous variation in pensionable ages created by a reform that affected particular birth cohorts, we find robust evidence of spillovers from the retirement behavior of the affected cohorts to the unaffected cohorts. The magnitude of spillovers is large but limited to cohorts within approximately four to five years of age. In these cohorts, a one percentage point reduction in the share of peers who are affected by the reform and retire is associated with (at least) a 0.25 percentage point reduction in the share of peers retiring who are unaffected by the reform. We conclude peer effects amplify the effects of changes in retirement incentives. Our estimates imply reforms that encourage later retirements may produce changes in the share of older workers who retire that are at least 27% larger than the estimated response to changes in own incentives.
Speaker bio: David Jaegar is a Professor of Economics at the City University of New York (CUNY) Graduate Center, a Research Associate at the NBER and a Research Fellow at IZA Bonn. He is also a Research Fellow at CESifo (Munich) and an External Research Fellow at the Center for Research and Analysis of Migration (CReAM) at University College London. He has held permanent and visiting positions at the Bureau of Labor Statistics, Hunter College, the College of William and Mary, the University of Cologne, Bonn University, and Princeton University, among others. In 1996, he was the first recipient of the W.E. Upjohn Dissertation Prize and has been honored with a fellowship from the Alexander von Humboldt Foundation and as an invited lecturer at the IZA Summer School. His primary current research areas of the economics of education, immigration and migration, fertility, conflict and terrorism, and quantitative medieval history.