Summary

We offer novel estimates of the impact of pension wealth on labor provide removed from retirement.  We exploit a 2014 German reform – popularly referred to as Mütterrente reform – that elevated the pension wealth of moms of kids born earlier than January 1992 by 4.4 % per youngster on common.  Utilizing administrative information on the universe of working histories, we implement a difference-in-difference design evaluating girls who had their first youngster earlier than versus after January 1, 1992.  We doc important reductions in labor earnings, pushed by intensive margin responses.  Our estimates indicate that, on common, an additional euro of pension wealth in a given interval reduces unconditional labor earnings by about 60 cents.

The paper discovered that:

• Adjustments within the generosity of public pension methods can have an effect on labor provide habits removed from retirement.
• Reductions in labor earnings, pushed by intensive margin responses, indicate that, on common, an additional euro of pension wealth in a given interval reduces unconditional labor earnings by about 60 cents.
• Responses are bigger amongst girls with decrease predicted returns to tenure and better pre-reform pension wealth and girls whose companions are nearer to the statutory retirement age.

The coverage implications of the findings are:

• People are ahead wanting and reply to pension adjustments far earlier than retirement age.
• Spillovers throughout the family can amplify responses to particular person incentives.
• This means that pension reforms can have mixture labor provide results effectively past the direct affect on people on the verge of retirement.