The Impact of Wealth on Job Exit Rates of Elderly Workers

Theoretical models predict a positive impact of the level of individual wealth on the job exit probability. Empirically this prediction is most likely to be relevant for elderly workers who have accumulated wealth throughout their working life and have a short residual working life. In the Netherlands, as in other European countries, there is a policy debate about the introduction of more individual freedom of choice in pension schemes. The individual level of wealth will become an increasingly important factor in the retirement decision. Therefore it is relevant to know whether workers with a different financial situation make different job exit decisions, given other factors. Empirical analysis of job exit behaviour of elderly workers so far has concentrated on properties of the pension system and health status. For a sample of elderly male workers in the Netherlands in the period 1995 through 2001, we analyse the impact of wealth, savings, and debt position on job exit rates. We find evidence for a positive effect of wealth on the probability to retire (early).