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Earning Distribution and Labour Supply after a Retirement Earnings Test Reform

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Author Info

  • Hernæs, Erik

    ()
    (Frisch Centre for Economic Research)

  • Jia, Zhiyang

    ()
    (Statistics Norway,)

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    Abstract

    Norwegian administrative data are used to evaluate the impact of a doubling of the threshold in the retirement earnings test. We find almost no impact on the extensive margin, but a positive effect on the intensive margin. This positive effect is uneven over the earnings distribution, and concentrated on workers around the threshold, increasing with exposure to the reform and leading to a decrease in earnings inequality. Individuals who remain active until retirement age respond more to the reform. Conditional on pre-reform earnings, we find little evidence that individual characteristics such as working histories influence the responsiveness to the reform

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2012/Memo-01-2012.pdf
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    Bibliographic Info

    Paper provided by Oslo University, Department of Economics in its series Memorandum with number 01/2012.

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    Length: 44 pages
    Date of creation: 07 Feb 2012
    Date of revision:
    Handle: RePEc:hhs:osloec:2012_001

    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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    Web page: http://www.oekonomi.uio.no/indexe.html
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    Related research

    Keywords: retirement earnings test; benefit entitlement; labour supply behaviour; heterogeneity;

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    References

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    1. Song, Jae G. & Manchester, Joyce, 2007. "New evidence on earnings and benefit claims following changes in the retirement earnings test in 2000," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 669-700, April.
    2. Gary V. Engelhardt & Anil Kumar, 2007. "The Repeal of the Retirement Earnings Test and the Labor Supply of Older Men," Working Papers, Center for Retirement Research at Boston College wp2007-01, Center for Retirement Research, revised May 2007.
    3. Dahl, Svenn-Åge & Nilsen, Øivind Anti & Vaage, Kjell, 2002. "Gender Differences in Early Retirement Behaviour," Working Papers in Economics 02/02, University of Bergen, Department of Economics.
    4. Eric French, 2004. "The Effects of Health, Wealth and Wages on Labor Supply and Retirement Behavior," 2004 Meeting Papers 96, Society for Economic Dynamics.
    5. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
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