Increasing labor market participation of older workers in the Netherlands: the effects of pension incentives, increasing retirement age, and partial retirement

  • Yvonne Theeuwes

The Dutch government faces the challenge of fi nancing the pension bene fits of an aging society. In order to finance the pension benefi ts, the government aims to keep older workers longer in the labor market.
Using a stated preference analysis, we analyse how fi nancial incentives and increasing retirement age affect the preferences for early full retirement, late full retirement, or partial retirement. Furthermore, we analyse if provision of a partial retirement scheme would increase total labor supply among older workers. We find that partial retirement is preferred to early abrupt retirement and late abrupt retirement. Partial retirement is particularly attractive when it starts at age 63. More respondents prefer partial retirement and fewer respondents prefer early retirement when the rewards for retiring later increase. Provision of a partial retirement scheme could increase total labor supply, but it depends on the financial incentives. When rewards for retiring later are actuarially fair and pension accruals are actuarially fair, provision of a partial retirement scheme increases total labor supply.

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gewijd aan het bevorderen van een beter begrip van de economische en sociale gevolgen van pensioenen, vergrijzing en ‘de oude dag’ in Nederland en Europa.

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