Pension reform and labor supply: flexibility vs. prescription
Hemaes, Erik ; Markussen, Simen ; Piggott, John ; Røed, Knut
Institute of Labor Economics, Bonn
IZA - Bonn
2015
34 p.
early retirement ; labour supply ; pension reform ; work incentive
Discussion Paper
8812
Social protection - Old age benefits
English
Bibliogr.
"We exploit a comprehensive restructuring of the early retirement system in Norway in 2011 to examine labor supply responses to alternative pension reform strategies relying on improved work incentives (flexibility) or increased access ages (prescription), respectively. We find that increasing the returns to work is a powerful policy tool: The removal of the earnings test at age 63 led to an immediate increase in average annual labor earnings among the affected mature workers by around $14,700 (NOK 90,000). The implied uncompensated labor earnings elasticity (the percentage change in average gross earnings relative to the percentage change in average work-incentives) is around 0.25."
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