Pension reform and labor supply

Hernæs, Erik; Markussen, Simen; Piggott, John; Røed, Knut

doi:10.1016/j.jpubeco.2016.08.009

Cited by 74 publications

(70 citation statements)

References 14 publications

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“…Both find that the probability of being employed has increased more in private sector companies with new AFP than in public sector companies with old AFP, controlled for a range of other relevant factors. Hernaes et al (2016) also find that the probability of being employed for those in private sector companies without AFP decreases over the period. The reason seems to be that they now have the possibility of drawing a flexible old-age pension from the National Insurance scheme from the age of 62.…”

Section: Pensions and Social Security Legislationmentioning

confidence: 66%

“…Of those combining work and the old-age pension, over 80 percent work at least 30 hours per week (Claus et al, 2014;Dahl & Lien, 2013;Bråthen & Bakken, 2013). Hernaes et al (2016) and Midtsundstad & Nielsen (2014) compare changes in employment at before and after the pension reform in private sector companies with and without the new, flexible (actuarial neutral) AFP scheme and public sector companies with the old AFP scheme. Both find that the probability of being employed has increased more in private sector companies with new AFP than in public sector companies with old AFP, controlled for a range of other relevant factors.…”

Section: Pensions and Social Security Legislationmentioning

confidence: 99%

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Working environment and work retention

et al. 2017

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Section: Pensions and Social Security Legislationmentioning

confidence: 66%

Section: Pensions and Social Security Legislationmentioning

confidence: 99%

Working environment and work retention

et al. 2017

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“…Sensible policy changes can address potential funding shortfalls by enhancing voluntary trends, such as removing disincentives for those who want to defer retirement, or making actuarially fair pension adjustments that pay higher annuities to later retirees [52,53]. For example, Australia's means-tested government pension discourages both saving and work beyond retirement age by low-income people, while the cost of making the pension universal could be readily recouped by capping over-generous retirement-savings tax concessions to the rich.…”

Section: Ill-conceived Problems Ill-conceived Solutionsmentioning

confidence: 99%

“…With a universal pension, New Zealand achieves higher levels of over-65 workforce participation than Australia and lower levels of poverty among the elderly [54]. Likewise, in Norway removal of a pension earnings test considerably increased the labor supply from older workers [53].…”

Section: Ill-conceived Problems Ill-conceived Solutionsmentioning

confidence: 99%

Aging Human Populations: Good for Us, Good for the Earth

Götmark

Cafaro

O’Sullivan

2018

Trends in Ecology & Evolution

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“…Gruber and Orszag (2003), Song (2004) and Song and Manchester (2007) Regarding labor supply, many papers claim that the increase in labor supply due to the abolishment of an earnings test stems mostly from the intensive margin, i.e., the decision of working more hours than before, e.g. Disney and Smith (2002), Engelhardt and Kumar (2009), Friedberg (2000), Song (2002), Tran (2002), Hernaes et al (2016) or Hernaes and Jia (2013).…”

Section: New Zealandmentioning

confidence: 99%

Earnings Test, Non-actuarial Adjustments and Flexible Retirement

Axel¹,

Härtl²,

Leite³

2018

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We are grateful to Alexander Ludwig for advice on the computational algorithm. We thank Tabea ABSTRACTIn response to the challenges of increasing longevity, an obvious policy response is to gradually increase the statutory eligibility age for public pension benefits and to shut down pathways to early retirement such as special rules for women. This is, however, very unpopular. As an alternative, many countries have introduced "flexibility reforms" which allow combining parttime work and partial retirement. A key measure of these reforms is the abolishment of earnings tests. It is claimed that these reforms increase labor supply and therefore, also the sustainability of pension systems. We show that these claims may not be true in the circumstances of most European countries.To this end, we employ a life-cycle model of consumption and labor supply where the choices of labor force exit and benefit claiming age are endogenous and potentially separate. Earnings tests force workers to exit the labor market when claiming a pension. After abolishing the earnings test, workers can claim their benefits and can keep on working, potentially increasing labor supply. Our key result is that the difference between exit and claiming age strongly depends on the actuarial neutrality of the pension system and can become very large. Abolishing an earnings test as part of a "flexibility reform" may therefore create more labor supply but at the same time, reduce the average claiming age when adjustments remain less than actuarial, thereby worsening rather than improving the sustainability of public pension systems.

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Pension reform and labor supply

Cited by 74 publications

References 14 publications

Working environment and work retention

Working environment and work retention

Aging Human Populations: Good for Us, Good for the Earth

Earnings Test, Non-actuarial Adjustments and Flexible Retirement

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