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Early Retirement and Economic Incentives - Evidence from a Quasi-Natural Experiment

Authors:

Røed, Knut and Haugen, Fredrik

Year:

2003

Reference:

Labour

Vol. 17, No. 2, 203-228

Summary

During the 1990’s, a new subsidised early retirement option was quasi-randomly as-signed to two thirds of Norwegian elderly workers. We use this ‘natural experiment’ to evaluate how economic incentives affect retirement behaviour. The new retirement option reduced employment substantially, and this effect escalated over time. It did not substitute for disability pension or long term unemployment, and approximately two out of three retirees would have stayed employed without it. Subsidised retire-ment was primarily voluntary, but there is also some evidence that firms took advan-tage of the retirement program to ‘push out’ excess workers.

JEL:

C41, I38, J26

Keywords:

Retirement behaviour, duration models, natural experiments

Project:

Oppdragsgiver: Mitsubishi Research Institute
Oppdragsgivers prosjektnr.:
Frisch prosjekt: 1221 - The Ageing Population

Contact:

knut.roed@frisch.uio.no