Peer Effects and Retirement Decisions: Evidence from Pension Reform in Germany

Although there is an extensive literature studying the effects of individual incentives on retirement decisions, research on the influence of workplace peers is scant. It is important to determine whether individuals respond to own pension incentives and the behavior of their peers, as peer effects may enhance or detract from the intended effects of policy. Our research examines peer effects in the context of retirement using a custom extract from the German administrative pension system data for all individuals working in medium and large private establishments. We exploit changes in pensionable ages to identify the effects of peer retirements on individual retirement timing. JEL Categories: J26, H55, C31