Work and disability in old age: restrictions & incentives
Older individuals and individuals with occupational disability face incentives as well as restrictions that affect working longer or more hours. Retirement reforms introduce tax credits, make deferring of pension rights actuarially attractive, and increase the legal retirement age to stimulate labour market participation among older workers. In addition to such classic policies, provision of part-time work opportunities may also stimulate the labour market attachment of older workers. For disabled individuals, a lower benefit or stricter criteria to access the disability benefit create incentives to resume working.
However, older workers may be limited in their opportunities to work part-time because employers typically require a minimum number of hours of work for a specified job, or pension schemes do not allow flexible combinations of work and pension income. Partially disabled workers may have limited work capacity during their final years before reaching the retirement age, particularly if the retirement age is rising. Stricter criteria to access disability benefit can increase the health problems and mortality risk.
We investigate the incentives and restrictions faced by older individuals and individuals with a work-limiting health problem, and how they affect working full-time or part-time. In the first part of the project, we conduct a survey with individuals to investigate how pension incentives, a higher retirement age, and the provision of a partial retirement scheme affect preferred choices for working full-time or part-time beyond the early and legal retirement ages. We conduct a harmonized survey in the Netherlands, Germany, United States, and South Korea to carry out cross-national comparative analysis. The large institutional differences across the four countries create variation in the retirement preferences that help to better understand the effects of the retirement incentives.
In the second part of the project, we conduct a survey with employers in the Netherlands to investigate the establishment level policies towards partial retirement as well as the worker characteristics that are important for employers to offer part-time work opportunities to older individuals. We compare the results with the results from the same survey conducted with employers in the US to investigate whether the restrictions on partial retirement share common characteristics across the two countries, or otherwise identify the restrictions specific to the Netherlands.
In the third part of the project, we use administrative data on individuals claiming a disability benefit in the disability insurance scheme (WIA), and focus on the older age groups to investigate how a higher legal retirement age leads to problems due to limiting remaining work capacity and increases benefit claims or amounts. We also analyse heterogeneity in the effect of a higher legal retirement age with respect to health status and labour market characteristics, to identify groups at risk who are less likely to cope with the increasing retirement age.
In the fourth part, we use administrative data on sick workers insured under the old (WAO) and new (WIA) disability insurance schemes to investigate whether the disability reform brought by the new scheme has increased health problems and mortality risk, reduced marriage formation, or led the children of those affected by the reform to rely less on social security support.