November 30, 2015 | News

Congratulations!

On November 27, 2015, Thi Mai Van Bui, a PhD Student at the MPIDR, has successfully defended her dissertation at the University of Rostock. She investigated retirement decisions in a family context.

In many developed countries, the labor-force participation of older women has increased substantially over the past decades. The rates for older men, however, have been slower to climb or they have even dropped. The result is that the gender gap in labor-force participation has narrowed. Moreover, it is expected that ever growing numbers of women approaching retirement age in the near future will have long work histories. And, the proportion of dual-income couples is increasing. Against the background of these changes, Thi Mai Van Bui has investigated in her dissertation how married couples in Germany arrive at the decision whether and when to retire.

She also found out that the German pension reform of 1992 had the effect expected: Men and women do retire later. The reform had lifted the legal retirement age of 63 up two years to age 65 for women, next to those long-term insured and the unemployed. At the same time it provided financial disincentives to early retirement.

Thi Mai Van Bui homed in on the reform’s financial impact on individuals retired at age 60 or age 63. She discovered that the financial disincentives of the reform reduced significantly the probability of women to retire at age 60 and of men to retire at age 60 or 63.

Another result is that the financial disadvantages for women who retired early led to their husbands working longer:  Before the reform, women could retire at age 60 without receiving reductions to their pension. After the reform, this no longer applied to women born in the 1940s or later; they thus need to work longer to receive a full pension. These financial disincentives led to a reduction in the probability of their husbands to retire.

Thi Mai Van Bui work will help us gain a deeper understanding of how married couples plan the timing of their retirement. This knowledge is essential to provide forecasts on how the labor-participation rates of elderly people will develop in the years to come.