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Navigating through the Finnish Pension System

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  • Tuulia Hakola
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    Abstract

    The paper constructs a competing risks duration model, explaining the probability of retirement due to old-age, ill health or long-term unemployment. It also attempts to measure the degree of substitution between the various retirement channels, among other things, by using data on pension application rejections. The effect of the economic incentives was tested in a number of alternative specifications. In addition to simple replacement ratio, life-cycle incentives were calculated for each exit channel separately. Both the grace period compensations (unemployment benefits and sick allowances) and the actual pension benefits were considered. The paper concludes that the baseline hazards as well as the effects of a number of explanatory variables differ signficantly between the distinct retirement channels. It also finds some evidence on the channel substitutability between different retirement channels.

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    Bibliographic Info

    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 224.

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    Date of creation: 06 Jul 2000
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    Handle: RePEc:fer:dpaper:224

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    Related research

    Keywords: Unemployment pension; disability pension; old-age pension; substitutability of the pension channels;

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    References

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    1. Svenn-Age Dahl & Oivind Anti Nilsen & Kjell Vaage, 2000. "Work or retirement? Exit routes for Norwegian elderly," Applied Economics, Taylor & Francis Journals, vol. 32(14), pages 1865-1876.
    2. Roope Uusitalo, 1999. "Homo Entreprenaurus?," Discussion Papers 205, Government Institute for Economic Research Finland (VATT).
    3. McCall, B.P., 1993. "Unemployment Insurance Rules, Joblessness, and Part-Time Work," Papers 93-07, Minnesota - Industrial Relations Center.
    4. Florens, J.-P. & Fougère, D. & Mouchart, M., . "Duration models," CORE Discussion Papers RP -1213, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
      • FLORENS, Jean-Pierre & FOUGERE, Denis & MOUCHART, Michel, 1995. "Duration Models," CORE Discussion Papers 1995016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Tomi Kyyrä, 1999. "Post-Unemployment Wages and Economic Incentives to Exit from Unemployment," Research Reports 56, Government Institute for Economic Research Finland (VATT).
    6. Stepan Jurajda & Frederick J. Tannery, 2001. "Unemployment Durations and Extended Unemployment Benefits in Local Labor Markets," Labor and Demography 0012006, EconWPA.
    7. Regina Riphahn, 1997. "Disability retirement and unemployment - substitute pathways for labour force exit? An empirical test for the case of Germany," Applied Economics, Taylor & Francis Journals, vol. 29(5), pages 551-561.
    8. Heckman, James J. & Singer, Burton, 1984. "Econometric duration analysis," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 63-132.
    9. Jensen, P. & Nielsen, M.S. & Rosholm, M., 1999. "The Effects of Benefits, Incentives, and Sanctions on Youth Employment," Papers 99-05, Centre for Labour Market and Social Research, Danmark-.
    10. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
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    Cited by:
    1. Tuulia Hakola, 2002. "Economic Incentives and Labour Market Transitions of the Aged Finnish Workforce," Research Reports 89, Government Institute for Economic Research Finland (VATT).
    2. Deschryvere, Matthias, 2004. "Labour Force Behavior of Elderly Two Adult Households: Evidence from EU-countries," Discussion Papers 933, The Research Institute of the Finnish Economy.

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