Do Retirement Windfalls Create Entrepreneurs? Evidence from Türkiye's 2023 Retirement Age Reform (Research Square)

Summary

• Türkiye's 2023 reform removed the minimum retirement age and gave about 1.76 million workers a lifetime pension within a single year.p.2
• Per excess retiree, the number of pensioners who kept working in registered jobs rose by 0.30 to 0.52.p.2
• Business creation did not respond: the upper confidence bound for new firms is about one firm per 200 retirees.p.2
• Excess retirements sum to 1.76 million nationally, of which 1.63 million are former employees and 0.13 million former self-employed.p.8
• By the end of 2023 about 2 million people had retired under the new rule, including civil servants who are not part of the analysis.p.5
• The upper bound for new firm registrations in 2023 is 0.0046, or one additional firm per 217 retirees.p.13
• The simplified-regime effect of 0.062 corresponds to about 6 percent of the 2022 stock at mean exposure, but its Holm-adjusted p value is 0.20.p.16

Key insights

1. Working pensioners rose by 0.298 per excess retiree by December 2023 and by 0.373 by December 2024.p.11
2. The average age of the new retirees was about 48, close to the mean age of founders of high-growth firms in the United States.p.3
3. The upper bound of the 95 percent confidence interval for new firm registrations is about 7 percent of the pre-reform registration rate at mean exposure.p.4
4. The first stage of the instrument is 0.111 with an F statistic of 16.3.p.10
5. The simplified-regime effect remains positive in every leave-one-region-out sample, between 0.035 and 0.078.p.16
6. Effects are not larger where credit is scarce, so the liquidity-constraint hypothesis is rejected.p.18
7. Public employment service placements of young workers did not rise in high-exposure provinces, contradicting the argument that early retirement frees jobs for the young.p.4
8. Policies that count on pension or severance wealth to finance job-creating start-ups among older workers should not expect much without complementary support for growth.p.22