The SHARE International Seminar Series (SISS) presents:

Firm Productivity and Early Retirement Decisions: Evidence from Hungary and Europe

Abstract

Retirement decisions differ markedly by firm productivity. Using administrative data from Hungary, we find that employees at top-third productivity firms are 16 percentage points more likely to retire at the earliest eligibility age than those at bottom-third productivity firms.

We estimate that within-firm replaceability of workers, seniority wage profile, and part-time work prevalence at the firm explain 29-36% of this gap, and firm-level wage premium explain another 27-32%. Individual-level panel data from the Survey of Health, Ageing and Retirement in Europe (SHARE) confirm that results are present across Europe.

Using firm size as a proxy for productivity, we find that workers in larger firms are more likely to intend—and actually choose—to retire early. Income and wealth explain 5-8% of the firm size gap in early retirement propensity, and working conditions explain 9-17% of this gap.

Our findings are relevant for policies aiming to extend working lives, as they suggest that efforts to delay retirement should consider not only individual incentives but also the role of firm characteristics.

Biography

Anikó Bíró is a senior researcher at the Institute of Economics, ELTE Centre for Economic and Regional Studies in Budapest, Hungary. She is an empirical economist with research interests in the fields of Labour Economics, Health Economics, and the Economics of Ageing.

Anikó is the country team leader for SHARE Hungary.