The Effects of Financial Incentives on Retirement Decisions: Evidence from a Temporary Tax Rebate to Older Workers in Denmark

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We exploit a temporary tax rebate introduced in Denmark in 2008 to estimate the effect of financial incentives on retirement decisions. The scheme offered individuals in a limited number of cohorts a tax rebate of up to 100,000 DKK (approximately $20,000) if they stayed on the labor market until age 65, however individuals where only eligible if their prior income had been below 550,000 DKK (approximately the 90th income percentile), and the scheme thus makes it possible to employ a regression discontinuity design. The results from the estimations gives no systematic or significant finding of an effect on retirement behavior and an application of the elasticities found by Manilo and Weber (2011) suggest that the expected effects should be too small to be found statistical significant given our effective sample size.
Original languageEnglish
Publication statusUnpublished - 2013

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ID: 191663316