Assessing the Short-Term Impact of Pension Reforms on Older Workers’ Participation Rates in the EU : A Diff-in-Diff Approach

In this paper, the authors build a comprehensive data set of the pension reforms legislated in the EU between 1990 and 2006. They classify the reforms in three broad classes: fundamental changes to the old-age scheme (i.e., changes in the way the pension system is financed and/or in the eligibility conditions), non-fundamental changes to the old-age scheme and changes to early retirement schemes. They use the reform data set to conduct a “policy experiment” to assess the effects of such reforms on participation rates. It turns out that the benefits of reforms are somewhat elusive and depend on the age bracket, the gender and the nature of the reform. The effects are often non-significant and/or negative. The authors conclude that it is crucial, in order to maximize the labour market effects of pension reforms, to provide enough information to workers and to avoid lengthy and uncertain phase-in periods