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‘Relabelling’ of individual early retirement pension in Finland: Application and behavioural responses using Finnish register data

Author

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  • Kanabar, Ricky
  • Nivalainen, Satu
  • Järnefelt, Noora

Abstract

Using rich Finnish population level registers, we examine the impact of fusing a flexible early retirement pathway with a more stringent pathway, without changing eligibility conditions, so-called ‘relabelling’, on individual application behaviour. Our findings show that among affected cohorts the likelihood of applying for (successfully claiming) disability-related early retirement declined by 1.8 (1.5) percentage points equivalent to a relative drop of approximately 37 % (39 %) following the reform. Individuals with below tertiary level education and stronger lifetime labour market attachment exhibit a stronger behavioural response to the reform. We find tentative evidence of individual's bringing forward the age at which they substitute to a competing early retirement pathway designed to keep individuals in the labour market albeit on a part time basis. Our findings highlight the importance of targeted awareness building aimed at particular socioeconomic groups such as those with low levels of education when policymakers seek to consolidate early retirement programmes with differing pre-reform eligibility criteria.

Suggested Citation

  • Kanabar, Ricky & Nivalainen, Satu & Järnefelt, Noora, 2024. "‘Relabelling’ of individual early retirement pension in Finland: Application and behavioural responses using Finnish register data," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 20-38.
  • Handle: RePEc:eee:jeborg:v:224:y:2024:i:c:p:20-38
    DOI: 10.1016/j.jebo.2024.05.026
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    More about this item

    Keywords

    Retirement; Disability; Pensions; Finland; Regression discontinuity;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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