We investigate the impact of a change in the Czech early retirement scheme on the labor force participation of older male workers. Using the difference-in-differences method we find that a reduction in early retirement benefits by 2–3% leads to approximately the same decrease in the probability of being inactive. Our finding implies high elasticity of older male workers’ participation rate. The public policy implication is that a reduction in early retirement benefits can serve as a very effective tool to increase the participation of older men in the Czech labor market.
JEL Codes: J21, J26.
Keywords: Czech Republic, early retirement, labor market participation.
Published: December 2009
Download: CNB WP No. 7/2009 (pdf, 491 kB)