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Labour supply effects of early retirement provision

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  • Vestad, Ola Lotherington

Abstract

The main objective of this paper is to estimate labour supply effects of an early retirement programme in Norway. Detailed administrative data are employed in order to characterise full paths towards retirement and account for substitution from other exit routes, such as unemployment and disability insurance. By exploiting a reduction in the lower age limit for early retirement as a source of exogenous variation in individual eligibility I obtain robust difference-in-differences and triple differences estimates indicating that more than two out of three pensioners would still be working at the age of 63 had the age limit been 64 rather than 62. Hence, although successful in creating a more dignified exit route for early leavers, the programme also generated substantial costs in terms of inducing others to retire earlier.

Suggested Citation

  • Vestad, Ola Lotherington, 2013. "Labour supply effects of early retirement provision," Labour Economics, Elsevier, vol. 25(C), pages 98-109.
  • Handle: RePEc:eee:labeco:v:25:y:2013:i:c:p:98-109
    DOI: 10.1016/j.labeco.2013.04.001
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    Cited by:

    1. Andreas Fagereng & Charles Gottlieb & Luigi Guiso, 2017. "Asset Market Participation and Portfolio Choice over the Life-Cycle," Journal of Finance, American Finance Association, vol. 72(2), pages 705-750, April.
    2. Hernaes, Erik & Markussen, Simen & Piggott, John & Vestad, Ola L., 2013. "Does retirement age impact mortality?," Journal of Health Economics, Elsevier, vol. 32(3), pages 586-598.
    3. Staubli, Stefan & Zweimüller, Josef, 2013. "Does raising the early retirement age increase employment of older workers?," Journal of Public Economics, Elsevier, vol. 108(C), pages 17-32.
    4. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2018. "Labor Market and Distributional Effects of an Increase in the Retirement Age," IZA Discussion Papers 11618, Institute for the Study of Labor (IZA).
    5. Alfonso Sánchez-Martin & J. García-Pérez & Sergi Jiménez-Martín, 2014. "Delaying the Normal and Early Retirement Ages in Spain: Behavioural and Welfare Consequences for Employed and Unemployed Workers," De Economist, Springer, vol. 162(4), pages 341-375, December.
    6. Mathias Dolls & Karina Doorley & Alari Paulus & Hilmar Schneider & Sebastian Siegloch & Eric Sommer, 2017. "Fiscal sustainability and demographic change: a micro-approach for 27 EU countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(4), pages 575-615, August.
    7. Cribb, Jonathan & Emmerson, Carl & Tetlow, Gemma, 2016. "Signals matter? Large retirement responses to limited financial incentives," Labour Economics, Elsevier, vol. 42(C), pages 203-212.
    8. Vestad, Ola Lotherington, 2013. "Labour supply effects of early retirement provision," Labour Economics, Elsevier, vol. 25(C), pages 98-109.
    9. Sarah Le Duigou & Pierre-Jean Messe, 2017. "Pension reforms, older workers' employment and the role of job separation and finding rates in France," TEPP Working Paper 2017-10, TEPP.
    10. Hernaes, Erik & Markussen, Simen & Piggott, John & Røed, Knut, 2015. "Pension Reform and Labor Supply: Flexibility vs. Prescription," IZA Discussion Papers 8812, Institute for the Study of Labor (IZA).
    11. Dennis Fredriksen & Christian N. Brinch & Ola L. Vestad, 2017. "Life expectancy and claiming behavior in a flexible pension system," Discussion Papers 859, Statistics Norway, Research Department.
    12. Johnsen, Julian V. & Vaage, Kjell, 2015. "Spouses’ retirement and the take-up of disability pension," Working Papers in Economics 03/15, University of Bergen, Department of Economics.
    13. repec:esr:forcas:qec2017aut is not listed on IDEAS
    14. Simon Rabaté & Julie Rochut, 2017. "Employment and Substitution Effects of Raising the Statutory Eligibility Age in France," Working Papers halshs-01622346, HAL.
    15. Lorenzo Burlon & Montserrat Vilalta-Bufí, 2016. "A new look at technical progress and early retirement," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-39, December.
    16. Leinonen, Taina & Laaksonen, Mikko & Chandola, Tarani & Martikainen, Pekka, 2016. "Health as a predictor of early retirement before and after introduction of a flexible statutory pension age in Finland," Social Science & Medicine, Elsevier, vol. 158(C), pages 149-157.
    17. repec:eee:labeco:v:51:y:2018:i:c:p:247-270 is not listed on IDEAS
    18. Hernæs, Erik & Markussen, Simen & Piggott, John & Røed, Knut, 2016. "Pension reform and labor supply," Journal of Public Economics, Elsevier, vol. 142(C), pages 39-55.

    More about this item

    Keywords

    Induced retirement; Pension reform; Matched employer–employee register data; Difference-in-differences;

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

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