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Labour Supply Response of a Retirement Earnings Test Reform


Author Info

  • Hernæs, Erik

    (Ragnar Frisch Centre for Economic Research)

  • Jia, Zhiyang

    (Ragnar Frisch Centre for Economic Research)


Norwegian administrative data are used to evaluate the impact of a doubling of the threshold in the earnings test on the labour force activity. We find no impact on labour market participation, but positive effects on earnings. The effect increases with exposure to the reform and is stronger for individuals with earnings around the threshold and with high education. Individuals who remain active until retirement age respond more to the reform than those who left labour force earlier. The results indicate both substantial labour supply responsiveness among elderly, and heterogeneity with respect to preferences, labour market options or both.

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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 25/2009.

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Length: 31 pages
Date of creation: 30 Oct 2009
Date of revision:
Handle: RePEc:hhs:osloec:2009_025

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
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Related research

Keywords: Retirement earnings test; Benefit entitlement; Labour supply behaviour; Heterogeneity;

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