The Impact of Age Pension Eligibility Age on Retirement and Program Dependence: Evidence from an Australian Experiment

Social and Economic Dimensions of an Aging Population Research Papers from McMaster University

Abstract: Identifying the effect of the financial incentives created by social security systems on the retirement behaviour of individuals requires exogenous variation in program parameters. In this paper we study the 1993 Australian Age Pension reform which increased the eligibility age for women to access the social security benefit. We find economically significant responses to the increase in the Age Pension eligibility age. An increase in the eligibility age of 1 year induced a decline in retirement probability by approximately 10 percent. In addition, we find that the social security reform induced significant "program substitution." The rise in the Age Pension eligibility age had an unintended consequence of increasing enrolment in other social insurance programs, particularly the Disability Support Pension, which functioned as an alternative source for funding retirement.

Keywords: Retirement; age pension; program substitution (search for similar items in EconPapers)
JEL-codes: D91 I38 J26 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2012-05
New Economics Papers: this item is included in nep-age, nep-dem and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: The Impact of Age Pension Eligibility Age on Retirement and Program Dependence: Evidence from an Australian Experiment (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:sedapp:295

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