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Incentives, Health, and Retirement: Evidence from a Finnish Pension Reform

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  • Ollonqvist, Joonas
  • Kotakorpi, Kaisa
  • Laaksonen, Mikko
  • Martikainen, Pekka
  • Pirttilä, Jukka
  • Tarkiainen, Lasse

Abstract

We analyse the effects of changes in retirement incentives on retirement behaviour, and in particular whether individuals' health status modifes the effects of retirement incentives. We study these issues in the context of the Finnish pension reform of 2005, utilising detailed individual-level administrative data on health and retirement behaviour. Our results indicate that changes in economic incentives matter for retirement behaviour. Many types of individuals react to retirement incentives, and the reaction to economic incentives does not appear to vary according to the individuals' health status in a systematic way. Hence there does not seem to be a trade-off between providing incentives to postpone retirement and equal treatment of individuals with different health status.

Suggested Citation

  • Ollonqvist, Joonas & Kotakorpi, Kaisa & Laaksonen, Mikko & Martikainen, Pekka & Pirttilä, Jukka & Tarkiainen, Lasse, 2021. "Incentives, Health, and Retirement: Evidence from a Finnish Pension Reform," Working Papers 145, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:145
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    More about this item

    Keywords

    pension reform; retirement incentives; health; Social security; taxation and inequality; H55; J26; Sosiaaliturva;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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