NBER Working Papers by Klaas de Vos

This paper presents information on labor market participation of the elderly, mortality and health, pathways to retirement and rates of participation in various earnings replacing programs in the Netherlands. It presents an overview of reforms to Disability Insurance (DI) and other income maintenance and early retirement programs over the past few decades, and examines to what extent these reforms have affected labor market exit routes of older workers. The overall picture that emerges is that DI receipt appears unrelated to the general health of the population and that over the last two decades relatively fewer older workers exit the labor market through DI. This reduction may, arguably, in part be attributed to stricter DI eligibility rules.

Compared to other industrialized countries, the labor force participation of the elderly in the Netherlands is very low. Moreover, it has fallen very fast over recent years. We discuss the incentives for employees to retire, arising from public schemes such as social security and disability insurance, and from private arrangements, such as early retirement and occupational pensions. In general, the generous replacement rates offered by these schemes act as powerful stimuli for retirement. Although Dutch research into the retirement effects of the earnings replacing schemes for the elderly was limited until the early nineties, there is now a fast growing literature on this. This literature confirms the findings in the current paper.