Pathways to early retirement in Denmark, 1984‐2000

Abstract

PurposeThe paper seeks to describe the multitude of pathways to early exit from the labour force and to estimate how individuals allocate into different pathways out of the labour force conditional on early retirement.Design/methodology/approachA multinomial logit approach is used to analyse the characteristics of individuals who retire through each pathway compared to those remaining in the labour force.FindingsEight pathways from work to an early retirement programme are identified. Overall, availability and/or generosity of retirement programmes are important for early retirement through the employment and unemployment insurance benefit dominated pathways, while personal characteristics seem to be at least as important for early retirement through other pathways.Research limitations/implicationsAn interesting approach in future work would be to gain access to health data, making it possible to build a competing risks model where some pathways are used due to health shocks and others are chosen based on economic optimisation comparing compensation rates with disutility from continued work.Originality/valueWhile the dominant approach in many retirement studies is on destinations, the analytical focus in this paper is instead on how people span the period from leaving the job until entry into an early retirement programme. The period the authors study contains a policy experiment, where a programme for early retirement conditional on age and unemployment is opened and closed down again later in the period.