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Navigating through the Finnish Pension System

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  • Hakola, Tuulia

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.

Suggested Citation

  • Hakola, Tuulia, 2000. "Navigating through the Finnish Pension System," Discussion Papers 224, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:224
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    File URL: https://www.doria.fi/handle/10024/148120
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    References listed on IDEAS

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    7. Florens, J.-P. & Fougère, D. & Mouchart, M., 1995. "Duration models," LIDAM Reprints CORE 1213, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    9. Štěpán Jurajda & Frederick J. Tannery, 2003. "Unemployment Durations and Extended Unemployment Benefits in Local Labor Markets," ILR Review, Cornell University, ILR School, vol. 56(2), pages 324-348, January.
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    Cited by:

    1. Hakola, Tuulia, 2002. "Economic Incentives and Labour Market Transitions of the Aged Finnish Workforce," Research Reports 89, VATT Institute for Economic Research.
    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.
    3. Hakola, Tuulia & Uusitalo, Roope, 2001. "Let's Make a Deal - the Impact of Social Security Provisions and Firm Liabilities on Early Retirement," Discussion Papers 260, VATT Institute for Economic Research.

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