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Revisiting the effect of statutory pension ages on participation and the average age of retirement in OECD countries

Author

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  • David Turner

    (OECD Economics Department, Paris, France)

  • Hermes Morgavi

    (OECD Economics Department, Paris, France)

Abstract

Cross-country estimation work consistently finds that coefficients on statutory pension ages are positive and highly statistically significant in explaining labour force participation at older ages. However, the estimated effects are surprisingly modest when translated into the implied effect on the average effective age of retirement, which typically only increases by about 2 months for every year by which the statutory retirement age increases. This paper shows that grouping countries with similar pension systems, allowing for time heterogeneity and introducing other modelling choices, can improve the estimates of the effect of changes to the pension system. In countries in which there are alternative early retirement pathways or voluntary private pension systems, the effect of changes in statutory retirement ages tends to be dampened. However, for other countries, the effect of changes in statutory pension ages can be around two to three times larger than the typical finding from pooled country estimations.

Suggested Citation

  • David Turner & Hermes Morgavi, 2021. "Revisiting the effect of statutory pension ages on participation and the average age of retirement in OECD countries," Public Sector Economics, Institute of Public Finance, vol. 45(2), pages 257-282.
    • Handle: RePEc:ipf:psejou:v:45:y:2021:i:2:p:257-282
    DOI: 10.3326/pse.45.2.4
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    References listed on IDEAS

    as
    1. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
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    3. David A. Wise, 2012. "Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms," NBER Books, National Bureau of Economic Research, Inc, number wise11-1, March.
    4. Peter Gal & Adam Theising, 2015. "The macroeconomic impact of structural policies on labour market outcomes in OECD countries: A reassessment," OECD Economics Department Working Papers 1271, OECD Publishing.
    5. Axel H. Börsch-Supan & Courtney Coile, 2018. "Social Security Programs and Retirement Around the World: Reforms and Retirement Incentives – Introduction and Summary," NBER Working Papers 25280, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    statutory retirement ages; participation; labour supply; older workers;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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