Hours of Work and Retirement Behavior

Using a novel dataset from the 2006 Portuguese Labor Force Survey this paper examinesthe impact of a voluntary reduction in hours of work, before retirement, on the moment of exitfrom the labor force. If, as often suggested, flexibility in hours of work is a useful measure topostpone retirement, then a reduction in working hours should be associated with retirementat later ages. Results prove otherwise suggesting that reducing hours of work beforeretirement is associated with early exits from the labor force. A reduction in hours of workseems to signal the worker’s wish to retire sooner rather than to announce the desire ofremaining in the labor market. This result may enclose the need for some alternative policystrategies regarding working hours....