Two pension reforms in Austria increased the early retirement age from 60 to 62 for
men and from 55 to 58.25 for women. The reforms reduced early retirement by 18.9
percentage points among affected men aged 60-62 and by 22.3 percentage points among
affected women aged 55-58.25. The associated increase in employment was merely 6.8
percentage points among men and 10.1 percentage points among women. The reforms
had large spillover effects to the unemployment insurance program but negligible effects
on disability insurance claims. Specifically, unemployment increased by roughly 10
percentage points both among men and women. Spillover effects had substantial fiscal
implications. Absent spillover effects, the reduction of net government expenditures
would have amounted to 264 million Euros per year. Due to higher unemployment
insurance claims and associated foregone income tax revenues the actual reduction was
only 148 million Euros. High-wage and healthy workers carried the bulk of the fall in
net government expenditures. Low-wage and less healthy workers generated much less
government savings as they either continue to retire early via disability pensions or
bridge the gap to regular retirement by drawing unemployment benefits.