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Public Pension Reforms and Retirement Decisions: Narrative Evidence and Aggregate Implications

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  • Huixin Bi
  • Sarah Zubairy

Abstract

We construct a database of public pension policy changes with motivation and implementation information for ten OECD countries. Structural pension reforms, motivated by long-run sustainability concerns, often come with prolonged phase-in periods. In response to pension retrenchments implemented immediately, people close to retirement stay in the workforce longer. News about future pension retrenchments with implementation lags, however, is likely to lead this group to exit the labor market. This decline in the labor force participation rate is particularly strong for reforms with long lags, ones that introduce fundamental policy changes, and ones where citizens have lower trust in the government.

Suggested Citation

  • Huixin Bi & Sarah Zubairy, 2023. "Public Pension Reforms and Retirement Decisions: Narrative Evidence and Aggregate Implications," American Economic Journal: Economic Policy, American Economic Association, vol. 15(4), pages 142-182, November.
    • Handle: RePEc:aea:aejpol:v:15:y:2023:i:4:p:142-82
    DOI: 10.1257/pol.20200881
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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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