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The contribution of the wage structure to early retirement behaviour

Frimmel, Wolfgang, Winter-Ebmer, Rudolf, (2015), “The contribution of the wage structure to early retirement behaviour”, Voxeu, 28 Οκτωβρίου.

The literature on retirement age has tended to focus on the supply side of the labour market. Using Austrian data, this column examines how firms can influence workers’ retirement decisions through wage structure. Deferred compensations schemes characterised by steeper seniority-wage profiles are found to be associated with workers retiring earlier. Given that early labour market exit is associated with higher costs to social security systems, policymakers could focus on creating incentives for firms to flatten wage profiles.

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