Stefan Staubli

Does raising the retirement age increase employment of older workers

Two pension reforms in Austria increased the early retirement age (ERA) from 60 to 62 for men and from 55 to 58.25 for women. We find that raising the ERA increased employment by 9.75 percentage points among affected men and by 11 percentage points among affected women. The reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims. Specifically, unemployment increased by 12.5 percentage points among men and by 11.8 percentage points among women. The employment response was largest among high-wage and healthy workers, while low-wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the ERA via unemployment benefits. Taking spillover effects and additional tax revenues into account, we find that for a typical birth-year cohort a one year increase in the ERA resulted in a reduction of net government expenditures of 107 million euros for men and of 122 million euros for women.

Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

This paper explores how extended unemployment insurance (UI) benefits targeted to older workers affect early retirement and social welfare. The trade-off of optimal UI between consumption smoothing and moral hazard requires accounting for the entire early retirement system, which often includes extended UI and relaxed access to disability insurance (DI). We argue that extended UI generates program complementarity (increased take-up of UI followed by DI and/or regular retirement benefits) and program substitution (increased take-up of UI instead of DI). Exploiting Austrias regional extended benefit program, which extended regular UI benefits to up to 4 years, we find: (i) program complementarity is quantitatively important for workers aged 50+; and (ii) program substitution is quantitatively relevant for workers aged 55+. We derive a simple rule for optimal UI that accounts for program complementarity and program substitution. Using the sufficient statistics approach, we conclude that UI for older workers was too generous and the regional extended benefit program was a suboptimal policy.

How Much Do Means-Tested Benefits Reduce the Demand for Annuities?

We analyze the effect of means-tested benefits on annuitization decisions. Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits. The availability of such means-tested payments creates an incentive to cash out (occupational) pension wealth for low and middle income earners, instead of taking the annuity. Agents trade-off the advantages from annuitization, receiving the wealth-enhancing mortality credit, to the disadvantages, giving up “free” wealth in the form of means-tested supplemental benefits. We find that the availability of means-tested benefits can reduce the desired annuitization levels substantially. Using individual level data, we show that the model’s predicted annuitization rates as a function of the level of pension wealth are roughly consistent with the cash-out patterns of occupational pension wealth observed in Switzerland.

Payouts in Switzerland: Explaining Developments in Annuitization

Switzerland is one of the few countries with long-term experience on the payout decisions made by retirees in fully-funded pension plans. Switzerland is also atypical in its unusually high annuitization rates: A majority of retirees covered by mandatory occupational pension plans choose an annuity. This paper will shed light on this extraordinary aspect. It revisits the historical role of occupational pension plans in the provision of old age income, and examines the role of regulation in the payout phase of the scheme. Recent developments in both market conditions and regulations are used to assess the impact of certain determinants of the annuitization decision, such as money’s worth ratios (MWR), means-tested benefits and behavioral factors.

How Much Does Annuity Demand React to a Large Price Change

In this paper, we present new evidence for the effect of changes in annuity prices on the decision to annuitize. We exploit an unprecedented change in policy in several Swiss occupational pension plans. There is an implied 8 percent reduction in the rate at which retirement capital is translated into an annuity, and this represents a net present value loss of CHF 18,500 (around US

Die Auswirkungen bedarfsabhängiger Leistungen : Ergänzungsleistungen in der Schweiz

20,000). To estimate the impact of this change, we use data from companies that changed their prices and from one large company that did not. We find that the price change reduces the propensity to annuitize among affected individuals by 16.8 percentage points.

The Effect of Inspector Group Size and Familiarity on Enforcement and Deterrence: Evidence from Oil Platforms

Abstract As in many other countries, means tested benefits constitute an important part of the Swiss old age security system and disability insurance. In contrast to universal benefits, such targeted transfers are intended to only support the ones in need and thereby lead to low level of public expenses. However, individuals face strong incentives at various stages in life to adapt their behavior in order to become eligible. Using the Swiss Erg¨anzungsleistungen as an example, we argue that means tested benefits increase the incentive to apply for disability benefits, raise the attractiveness of early retirement, and induce individuals to favor a lump sum payment over an annuity. Moreover, they decrease the incentive to purchase private long-term care insurance.

Tightening the Purse Strings: The Effect of Stricter DI Eligibility Criteria on Labor Supply

This paper provides new insights into the productivity of teams and the relationship between the inspector and the inspected party by examining data on inspections of offshore oil and gas platforms in the Gulf of Mexico. We exploit weather patterns that only influence the number of inspectors that are sent to inspect a platform and show that inspector group size matters; an additional inspector results in more severe sanctions being issued. We also exploit the agglomeration of two inspection offices to examine the effect of reducing the familiarity between an inspector and an inspected party; we find that reducing the inspector-offender relationship also results in more severe sanctions being issued. Combined, these findings are consistent with regulatory capture and related concerns about insulating inspectors from undue influence by those they are supposed to monitor. Using these shifts in sanction severity we also estimate the effectiveness of increasing enforcement on the deterrence of incidents, such as oil spills, fires, injuries, or fatalities. We only find weak evidence that increasing sanction severity increases deterrence.

The Distribution of Leisure Time Across Countries and Over Time

This paper explores the labor supply effects of a large-scale policy change in the Austrian disability insurance program, which tightened eligibility criteria for men above a certain age. Using administrative data on the universe of Austrian private-sector employees, the results of difference-in-difference type regressions suggest a substantial and statistically significant decline in disability enrollment of 5-5.7 percentage points and a modest increase in employment of 1.4 to 2.7 percentage points. On the other hand, the policy change had important spillover effects into the unemployment and sickness insurance program. Specifically, the share of individuals receiving unemployment benefits increased roughly by 3 percentage points and the share receiving sickness insurance benefits by 0.6 percentage points.

The Role of the Annuity's Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change

In this paper, we use time-use surveys to examine trends in the allocation of time in five industrialized countries over the last thirty years. Adjusting for changing demographics, we find that leisure time across countries has converged over this period. Specifically, leisure time has declined five to eight hours in countries with high leisure levels thirty years ago and has increased around one hour in the other countries. For men the reduction in leisure was driven by an increase in nonmarket work, while women dramatically increased time allocated to market work and decreased nonmarket work time. Lastly, we show that like in the USA leisure inequality increased in all countries of our sample.