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Does raising the pension age prolong working life? Evidence from pension age reform in Estonia

Author

Listed:
  • Orsolya Soosaar
  • Allan Puur
  • Lauri Leppik

Abstract

We estimate how raising the statutory retirement age affects employment by considering the pension age reform in Estonia, that gradually raised the normal retirement age (NRA) for women from 58 to 61.5 and the early retirement age (ERA) from 56 to 59.5 during the period of 2001 to 2011. The analysis employs a difference-in-differences estimation strategy on register data covering women born between 1943 and 1952. The reform did have an impact on the employment rate of affected women, with an estimated increase of 4.1 percentage points associated with the rise in the NRA, and 3.4 percentage points with the rise in the ERA. These estimates are at the lower end of those found in previous studies for other countries, pointing to the role of contextual features such as lower replace-ment rates and fewer disincentives to work while drawing pensions.

Suggested Citation

  • Orsolya Soosaar & Allan Puur & Lauri Leppik, 2020. "Does raising the pension age prolong working life? Evidence from pension age reform in Estonia," Bank of Estonia Working Papers wp2020-3, Bank of Estonia, revised 09 Jul 2020.
    • Handle: RePEc:eea:boewps:wp2020-3
    DOI: 10.23656/25045520/032020/0176
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    More about this item

    Keywords

    retirement age; older workers; employment;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • 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

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