IDEAS home Printed from https://ideas.repec.org/a/eee/joecag/v31y2025ics2212828x25000246.html
   My bibliography  Save this article

Early retirement provision for elderly displaced workers

Author

Listed:
  • Kruse, Herman
  • Myhre, Andreas S.

Abstract

This paper examines the effects of providing early retirement (ER) benefits to displaced workers with limited labor market opportunities at old age. An age-cutoff in eligibility for ER benefits in Norway, which we exploit using a regression discontinuity design, facilitates our study. We utilize detailed Norwegian matched employer–employee data containing information on bankruptcies occurring between 2001–2010 to identify job displacements, along with data on individual income, wealth, pensions, and social security benefits to examine behavioral effects of ER provision and the associated implications for welfare and policy. While we are unable to detect any distortionary effect on labor supply, we detect that those who lose ER eligibility substitute 69 percent of their lost benefits through uptake of other social security benefits, with 51 percentage points attributed to disability insurance and 13 percentage points to unemployment insurance. Applying the Baily–Chetty formula for optimal social security, we show that ER provision is a suboptimal policy.

Suggested Citation

  • Kruse, Herman & Myhre, Andreas S., 2025. "Early retirement provision for elderly displaced workers," The Journal of the Economics of Ageing, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:joecag:v:31:y:2025:i:c:s2212828x25000246
    DOI: 10.1016/j.jeoa.2025.100569
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2212828X25000246
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.jeoa.2025.100569?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Early retirement; Job displacement; Labor supply; Benefit substitution; Social security;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joecag:v:31:y:2025:i:c:s2212828x25000246. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/the-journal-of-the-economics-of-ageing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.