. . . . . . Motivation Institutional setting Data description Econometrics Conclusion Impact of Early Retirement Incentives on Labor Market Participation: Evidence from the Parametric Change in the Czech Republic David Kocourek∗ Filip Pertold∗∗ ∗CNB, IES FSV UK ∗∗CERGE-EI, Aarhus School of Business October 22, 2010 David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Motivation Demografical projection Literature review Institutional setting Newly granted pensions Changes in early retirement benefits Data description Summary statistics Graphical overview Econometrics Econometric methodology Econometric results Robustness checks Conclusion David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Motivation The Czech Republic–example of aging society. Many countries try to avoid early retirement option. High participation rate of older workers: one way to go around. The Czech Republic in 2001: decrease in early retirement benefits. Was it successful? David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Motivation The Czech Republic–example of aging society. Many countries try to avoid early retirement option. High participation rate of older workers: one way to go around. The Czech Republic in 2001: decrease in early retirement benefits. Was it successful? David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Motivation The Czech Republic–example of aging society. Many countries try to avoid early retirement option. High participation rate of older workers: one way to go around. The Czech Republic in 2001: decrease in early retirement benefits. Was it successful? David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Motivation The Czech Republic–example of aging society. Many countries try to avoid early retirement option. High participation rate of older workers: one way to go around. The Czech Republic in 2001: decrease in early retirement benefits. Was it successful? David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Demographic projection of the Czech population 11 % 30 % 020406080 (in%) 2000 2010 2020 2030 2040 2050 all: 65+ share all: 15−64 share all: 0−14 share women: share 65+ men: share 65+ Source: Czech Statistical Office (2003) Demografic projection for the Czech population David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Literature review Empirical literature provide mixed results. Gruber and Wise (2002) and Borsch-Supan (2000) show positive relationship between incentives and labor force participation Brinch, Hernaes and Strom (2001) show negative relationship no clear evidence e.g. Baker and Benjamin (1999) or Moffitt (1987) David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Literature review Empirical literature provide mixed results. Gruber and Wise (2002) and Borsch-Supan (2000) show positive relationship between incentives and labor force participation Brinch, Hernaes and Strom (2001) show negative relationship no clear evidence e.g. Baker and Benjamin (1999) or Moffitt (1987) David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Literature review Empirical literature provide mixed results. Gruber and Wise (2002) and Borsch-Supan (2000) show positive relationship between incentives and labor force participation Brinch, Hernaes and Strom (2001) show negative relationship no clear evidence e.g. Baker and Benjamin (1999) or Moffitt (1987) David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Demografical projection Literature review Literature review Empirical literature provide mixed results. Gruber and Wise (2002) and Borsch-Supan (2000) show positive relationship between incentives and labor force participation Brinch, Hernaes and Strom (2001) show negative relationship no clear evidence e.g. Baker and Benjamin (1999) or Moffitt (1987) David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Institutional setting The Czech retirement scheme is standard pay-as-you-go (PAYG) system with high degree of redistribution. Statutory retirement age has been prolonging by two months per year since 1996=>problems for estimation. Several option how to enter early retirement: permanently cut benefits, temporarily cut benefits, disability retirement. ”Punishment” for the permanently cut early retirement was changed in June 2001. ”Punishment” increased from 0.6 or 0.3 % to 0.9 % per each 90 days remaining to statutory retirement age. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Institutional setting The Czech retirement scheme is standard pay-as-you-go (PAYG) system with high degree of redistribution. Statutory retirement age has been prolonging by two months per year since 1996=>problems for estimation. Several option how to enter early retirement: permanently cut benefits, temporarily cut benefits, disability retirement. ”Punishment” for the permanently cut early retirement was changed in June 2001. ”Punishment” increased from 0.6 or 0.3 % to 0.9 % per each 90 days remaining to statutory retirement age. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Institutional setting The Czech retirement scheme is standard pay-as-you-go (PAYG) system with high degree of redistribution. Statutory retirement age has been prolonging by two months per year since 1996=>problems for estimation. Several option how to enter early retirement: permanently cut benefits, temporarily cut benefits, disability retirement. ”Punishment” for the permanently cut early retirement was changed in June 2001. ”Punishment” increased from 0.6 or 0.3 % to 0.9 % per each 90 days remaining to statutory retirement age. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Institutional setting The Czech retirement scheme is standard pay-as-you-go (PAYG) system with high degree of redistribution. Statutory retirement age has been prolonging by two months per year since 1996=>problems for estimation. Several option how to enter early retirement: permanently cut benefits, temporarily cut benefits, disability retirement. ”Punishment” for the permanently cut early retirement was changed in June 2001. ”Punishment” increased from 0.6 or 0.3 % to 0.9 % per each 90 days remaining to statutory retirement age. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Institutional setting The Czech retirement scheme is standard pay-as-you-go (PAYG) system with high degree of redistribution. Statutory retirement age has been prolonging by two months per year since 1996=>problems for estimation. Several option how to enter early retirement: permanently cut benefits, temporarily cut benefits, disability retirement. ”Punishment” for the permanently cut early retirement was changed in June 2001. ”Punishment” increased from 0.6 or 0.3 % to 0.9 % per each 90 days remaining to statutory retirement age. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Table: Newly granted pensions (in CZK) 1999 2000 2001 2002 2003 2004 2005 (1) all pensions 5,991 6,106 6,399 7,055 7,224 7,760 8,391 (2) at retirement age 6,222 6,485 6,823 7,226 7,512 7,968 8,693 (3) after retirement age 7,272 7,485 7,916 8,621 9,157 9,410 10,306 (4) early ret. - temp. cut 5,370 5,513 5,838 5,917 6,224 6,404 6,836 (5) early ret. - perm. cut 5,593 5,659 5,844 5,667 5,996 6,261 6,984 (5)/(2) (in %) 90 87 86 78 80 79 80 Source: MLSA (2006), own computation of averages David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Newly granted pensions Changes in early retirement benefits Table: Changes in early retirement benefits due to the policy change Years before Absolute Relative Change in terms eligible age T decrease descrease of net wage (in pp) 70% of avg. wage T-3 191 -3 -2.4 T-2 133 -2 -1.6 T-1 131 -2 -1.1 Avg. wage T-3 218 -3 -1.9 T-2 149 -2 -1.3 T-1 152 -2 -1.3 150% of avg. wage T-3 237 -3 -1.3 T-2 162 -2 -0.9 T-1 166 -2 -0.9 Source: Own computation based on the official formula published in MLSA (2002). Note: Benefits are computed for 46 years of service. The net wage is CZK 11,324 in 2001. Three income groups were chosen arbitrarily. 70 % of the average wage reflects approximately the group of workers with the median wage and 150 % of the average wage represents managers and high-paid workers in the Czech economy. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Data description Czech Labor Force Survey from 1998-2005. Rotating panel data (individual is observed only 4-5 quarters in row). Subsample of males. Age window: 6 to 0 years until the eligibility age. 50 152 observations for 11 843 individuals Basic characteristics: labor market status (endogenous variable), education, marital status, number of household members, district. Limitations: we observe only few changes in labor market status for individual i We treat our data as repeated cross-section. We do not observe wages. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Table: Descriptive statistics variable control group treatment group Mean Std. Dev. Mean Std. Dev. inactivity status 0.17 0.38 0.42 0.49 elementary educ. 0.09 0.29 0.12 0.32 apprenticeship 0.54 0.50 0.50 0.50 high school educ. 0.24 0.43 0.25 0.43 lower tertiary educ. 0.01 0.10 0.01 0.09 upper tertiary educ. 0.11 0.32 0.12 0.32 unmarried 0.04 0.21 0.04 0.20 married 0.84 0.37 0.84 0.37 widowed 0.04 0.20 0.05 0.22 divorced 0.07 0.26 0.07 0.26 before the policy change 0.22 0.42 0.25 0.43 1-1.5 year after the policy change 0.24 0.43 0.26 0.44 1.5 - 3 years after the policy change 0.28 0.45 0.26 0.44 3 - 4.5 years after the policy change 0.26 0.44 0.23 0.42 number of household members 2.60 1.07 2.41 0.97 age 56.90 0.94 59.72 0.78 David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Newly granted pensions (men - in % of total) policy change 0510152025303540 2000 2001 2002 2003 2004 2005 at the retirement age after the retirement age early ret. − temp. cut early ret. − perm. cut disability retirement Source: Czech Social Security Administration, own calculation Note: The short time span before the actual policy change is given by the limitation of official statistics. The remainder to 100% are e.g. widower’s and orphan’s pensions. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Participation rate in 1998-2005 policy change 1525354555657585 (in%) 1998 1999 2000 2001 2002 2003 2004 2005 control group treatment group difference Source: Labor Force Survey, own calculation David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Participation rate across cohorts 1030507090 (in%) −7 −6 −5 −4 −3 −2 −1 0 1 2 3 4 years before(−)/after(+) retirement age eligibility age 1Q2000 − 2Q2001 (period before change) 3Q2001 − 4Q2002 (1. period after change) 1Q2003 − 2Q2004 (2. period after change) 3Q2004 − 4Q2005 (3. period after change) Source: Labor Force Survey, own calculation David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Summary statistics Graphical overview Hazard rate −.10.1.2.3.4 −7 −6 −5 −4 −3 −2 −1 0 1 2 3 years before(−)/after(+) retirement age eligibility age 1Q2000 − 2Q2001 (period before change) 3Q2004 − 4Q2005 (3. period after change) Source: Labor Force Survey, own calculation David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric methodology Difference-in-differences (Baker and Benjamin, 1999). Treatment group eligible for early retirement program less than 3 years before statutory retirement age Control group more than 3 years before statutory retirement age 1.5 year long=>robustness check Periods: one before, three after the policy step Problems: the system was not stable before the policy change expectations David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric methodology Difference-in-differences (Baker and Benjamin, 1999). Treatment group eligible for early retirement program less than 3 years before statutory retirement age Control group more than 3 years before statutory retirement age 1.5 year long=>robustness check Periods: one before, three after the policy step Problems: the system was not stable before the policy change expectations David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric methodology Difference-in-differences (Baker and Benjamin, 1999). Treatment group eligible for early retirement program less than 3 years before statutory retirement age Control group more than 3 years before statutory retirement age 1.5 year long=>robustness check Periods: one before, three after the policy step Problems: the system was not stable before the policy change expectations David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric methodology Difference-in-differences (Baker and Benjamin, 1999). Treatment group eligible for early retirement program less than 3 years before statutory retirement age Control group more than 3 years before statutory retirement age 1.5 year long=>robustness check Periods: one before, three after the policy step Problems: the system was not stable before the policy change expectations David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric methodology Difference-in-differences (Baker and Benjamin, 1999). Treatment group eligible for early retirement program less than 3 years before statutory retirement age Control group more than 3 years before statutory retirement age 1.5 year long=>robustness check Periods: one before, three after the policy step Problems: the system was not stable before the policy change expectations David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric specification Basic econometric se up: yit = αi + β1OLDit + β2AFTER1it + β3AFTER2it +β4AFTER3it + β5(OLDit · AFTER1it) + β6(OLDit · AFTER2it) + β7(OLDit · AFTER3it) + β8Xit + ϵit, LHS: 0 if individual i is inactive at time t, 1 if an individual is active It is estimated using probit model. Interaction terms should identify the policy effect. We used different periods for robustness checks and controlling for expectations. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric specification Basic econometric se up: yit = αi + β1OLDit + β2AFTER1it + β3AFTER2it +β4AFTER3it + β5(OLDit · AFTER1it) + β6(OLDit · AFTER2it) + β7(OLDit · AFTER3it) + β8Xit + ϵit, LHS: 0 if individual i is inactive at time t, 1 if an individual is active It is estimated using probit model. Interaction terms should identify the policy effect. We used different periods for robustness checks and controlling for expectations. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric specification Basic econometric se up: yit = αi + β1OLDit + β2AFTER1it + β3AFTER2it +β4AFTER3it + β5(OLDit · AFTER1it) + β6(OLDit · AFTER2it) + β7(OLDit · AFTER3it) + β8Xit + ϵit, LHS: 0 if individual i is inactive at time t, 1 if an individual is active It is estimated using probit model. Interaction terms should identify the policy effect. We used different periods for robustness checks and controlling for expectations. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric specification Basic econometric se up: yit = αi + β1OLDit + β2AFTER1it + β3AFTER2it +β4AFTER3it + β5(OLDit · AFTER1it) + β6(OLDit · AFTER2it) + β7(OLDit · AFTER3it) + β8Xit + ϵit, LHS: 0 if individual i is inactive at time t, 1 if an individual is active It is estimated using probit model. Interaction terms should identify the policy effect. We used different periods for robustness checks and controlling for expectations. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Econometric specification Basic econometric se up: yit = αi + β1OLDit + β2AFTER1it + β3AFTER2it +β4AFTER3it + β5(OLDit · AFTER1it) + β6(OLDit · AFTER2it) + β7(OLDit · AFTER3it) + β8Xit + ϵit, LHS: 0 if individual i is inactive at time t, 1 if an individual is active It is estimated using probit model. Interaction terms should identify the policy effect. We used different periods for robustness checks and controlling for expectations. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Table: Estimated coefficients from the probit model in three different specifications Model (1) (2) (3) OLD*AFTER1 -0.0159 -0.0108 -0.0096 (0.0180) (0.0182) (0.0182) OLD*AFTER2 -0.0509*** -0.0340* -0.0318* (0.0179) (0.0184) (0.0184) OLD*AFTER3 -0.0457** -0.0354* -0.0317 (0.0187) (0.0189) (0.0191) Personal characteristics X X District dummies X N 50,152 50,152 50,152 Pseudo R-squared 0.07 0.10 0.14 Note: Coefficients are recalculated into the probability measure (min 0, max 1). Standard errors are in parentheses. *** p<0.01, ** p<0.05, * p<0.1 David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Table: Estimated coefficients from the probit model in three different specifications without the first half of 2001 Model (1) (2) (3) OLD*AFTER1 -0.0004 0.0034 0.0031 (0.0209) (0.0211) (.02104) OLD*AFTER2 -0.0361* -0.0201 -0.0197 (0.0196) (0.0201) (0.0201) OLD*AFTER3 -0.0308 -0.0214 -0.0193 (0.0204) (0.0206) (0.0207) Personal characteristics X X District dummies X N 46,127 46,127 46,127 Pseudo R-squared 0.06 0.11 0.13 Note: Coefficients are recalculated into the probability measure (min 0, max 1). Standard errors are in parentheses. *** p<0.01, ** p<0.05, * p<0.1 David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Econometric methodology Econometric results Robustness checks Table: Marginal effects probit Variables Active Employed Unemployed OLD1*after2 0.072*** 0.045 0.038** (0.023) (0.027) (0.020) OLD1*after3 0.053** 0.040 0.013 (0.024) (0.027) (0.015) OLD2*after2 0.079*** 0.062** 0.034* (0.025) (0.029) (0.025) OLD2*after3 0.081*** 0.078** 0.008 (0.026) (0.029) (0.018) OLD3*after2 0.069** 0.051 0.042 (0.027) (0.031) (0.035) OLD3*after3 0.041 0.031 0.034 (0.031) (0.033) (0.035) Note: Coefficients are recalculated into the probability measure (min 0, max 1). Standard errors are in parentheses. *** p<0.01, ** p<0.05, * p<0.1 David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Conclusion and Further Research 3 % decrease in early retirement benefits boosted labor supply by approximately same size These findings are in line with high elasticity of labor market participation of older males across Europe (B¨orsch-Supan, 2000) and in the Czech Republic (Galuˇsˇc´ak, 2002) Further research: Heterogeneous reaction across different regions and demographic characteristics. Add wages if possible to obtain them. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Conclusion and Further Research 3 % decrease in early retirement benefits boosted labor supply by approximately same size These findings are in line with high elasticity of labor market participation of older males across Europe (B¨orsch-Supan, 2000) and in the Czech Republic (Galuˇsˇc´ak, 2002) Further research: Heterogeneous reaction across different regions and demographic characteristics. Add wages if possible to obtain them. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip . . . . . . Motivation Institutional setting Data description Econometrics Conclusion Conclusion and Further Research 3 % decrease in early retirement benefits boosted labor supply by approximately same size These findings are in line with high elasticity of labor market participation of older males across Europe (B¨orsch-Supan, 2000) and in the Czech Republic (Galuˇsˇc´ak, 2002) Further research: Heterogeneous reaction across different regions and demographic characteristics. Add wages if possible to obtain them. David Kocourek, Filip Pertold Impact of Early Retirement Incentives on Labor Market Particip