samlet årgang - Økonomisk Institut - Københavns Universitet

THE EFFECT OF THE ’92-REFORM OF THE VERP ON RETIREMENT AGE 181
Table 1. Trend adjusted difference-in-differences estimates of the effect on retirement
age of the 1992 changes to the VERP policy, VERP1 vs. PEP, VERP2 vs. PEP. Pooled
OLS results for 60-66-year-old retirees based on observations for 1988, 1989, 1991
and 1993.
VERP1 VERP2
VERP -1.291 *** -0.968 ***
(0.279) (0.326)
AFTER -0.151 -0.186
(0.352) (0.369)
VERP*AFTER 0.107 -0.001
(0.376) (0.447)
ADJUST -0.488 -0.396
(0.356) (0.372)
VERP*ADJUST 0.478 0.396
(0.376) (0.438)
AFTER*ADJUST -0.018 0.043
(0.511) (0.533)
VERP*AFTER*ADJUST 0.022 0.014
(0.540) 0.628)
Number of observations 1956 716
*: Significant at the 10 percent level; **: significant at the 5 percent level; ***: significant at the 1 percent level.
Note: Additional controls include gender, education, cohabitation status, experience, lagged income and lagged unemployment.
might have been that retirement was in fact delayed from age 60-62 until the age of 63,
while retirement at age 65-66 at the same time was hastened. Such shifts might explain
why the effect was zero on average. To control for this, separate analyses for each of
the ages 60 to 66 years are conducted. The focus is on individuals who were in the
labour market at age x-1.
First of all, these results suggest that the change in VERP policy increased the incentives
for retiring at age 63 and 64 as intended (see Table 2 above). The increase in
age 64 retirement suggests that the fact that the VERP benefits increased on average
when retirement occurred at age 64 was more important than the fact that people who
delayed retirement from age 63 to age 64 were not compensated for receiving benefits
for a shorter period. The results indicate that the changes in financial incentives for
retiring at age 63-64 have been sufficient to change the retirement behaviour in the intended
direction for individuals in the VERP group around these ages.