The aim of this study is to assess the impact of the ongoing harmonisation of the retirement age for women with that for men
on women's labour supply in Austria. According to the current legal framework, the standard retirement age for women will
be gradually raised from 60 to 65 years from 2024 onwards, with the retirement age being raised by 6 months each year. The
impact of the pension reform on women's labour supply is quantified using the dynamic microsimulation model microDEMS. This
model integrates demographic changes in line with official population projections and detailed labour market modelling. According
to our projections, the labour supply of women aged 60 to 64 increases by 87,000 in 2040 compared to a scenario in which the
retirement age remains unchanged. We compare our results with two alternative approaches: the more stylised microWELT simulation
model and a purely data-driven approach. While all methods produce very similar results in the long run, the detailed modelling
in microDEMS provides more plausible results during the transition period when the reform is gradually implemented. This is
because it allows for a realistic representation of pension paths, taking into account all relevant pension types and the
corresponding eligibility criteria, such as sufficient accumulated insurance periods. In contrast to a purely data-driven
approach, microDEMS modelling also has the advantage of explicitly representing and quantifying the components of the change
in labour supply.
JEL-Codes:J26, C53, J21
Keywords:Dynamic microsimulation, Pension reform, Labour force participation
Research group:Labour Economics, Income and Social Security