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Labor supply on the eve of retirement. Disparate effects of immediate and postponed rewards to working

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  • Christian N. Brinch
  • Erik Hernæs
  • Zhiyang Jia

    ()
    (Statistics Norway)

Abstract

We study two recent changes in incentives to work facing 67-69 year old workers in Norway: an earnings test reform which increases current earnings from work, and a pension system maturation which removes pension accrual from work. Within a difference-in-differences framework, we exploit these changes to investigate the effects of economic incentives. We find the earnings test reform has large effects, while the pension system maturation has no significant effects. The findings confirm that 67-69 year olds can adjust their work efforts to economic incentives, but do so only to thoses related to current income and not to future pensions.

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Bibliographic Info

Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 698.

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Date of creation: Jul 2012
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Handle: RePEc:ssb:dispap:698

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Keywords: labor supply; retirement earnings test; social security wealth; difference-indifferences;

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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. SErgio Firpo & Nicole M. Fortin & Thomas Lemieux, 2006. "Unconditional Quantile Regressions," Textos para discussão 533, Department of Economics PUC-Rio (Brazil).
  3. 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.
  4. Raj Chetty & John N. Friedman & Tore Olsen & Luigi Pistaferri, 2009. "Adjustment Costs, Firm Responses, and Micro vs. Macro Labor Supply Elasticities: Evidence from Danish Tax Records," NBER Working Papers 15617, National Bureau of Economic Research, Inc.
  5. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
  6. Havnes, Tarjei & Mogstad, Magne, 2010. "Is Universal Child Care Leveling the Playing Field? Evidence from Non-Linear Difference-in-Differences," IZA Discussion Papers 4978, Institute for the Study of Labor (IZA).
  7. Gruber, Jonathan & Orszag, Peter, 2003. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," National Tax Journal, National Tax Association, vol. 56(4), pages 755-73, December.
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