Race for Retirement
The study analyses the effects of the pension system on the labour supply of the elderly in Finland. A significant change in the age structure of the population, combined with falling employment rates for the aged, can yield pressures on the financing of the mainly Pay-As-You-Go, Defined Benefit pension system. Empirical results provide some evidence that economic incentives matter also to the aged Finnish employees. It was verified by controlling a number of other variables, that if an individual was better off by postponing his retirement decision, he was more likely to continue working. Two simulations demonstrate that even if altering economic incentives has some of the desired impact of postponing retirement, this impact seemed rather small. The study therefore suggests the need to alter also age restrictions if the average retirement age needs to be altered radically.
|Date of creation:||19 Nov 1999|
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