IDEAS home Printed from https://ideas.repec.org/a/bla/scandj/v102y2000i3p481-502.html
   My bibliography  Save this article

Early Retirement and Economic Incentives

Author

Listed:
  • Erik Hernoes
  • Marte Sollie
  • Steinar Strøm

Abstract

In Norway, early retirement programmes have gradually reduced the retirement age from 67 to 62 for a majority of the labour force. Based on micro data for 1990 and 1992, we estimate a competing‐risk model with three states: full retirement, partial retirement/part‐time work and full‐time work. We then use the estimated model in simulations to study how financial incentives can be strengthened to extend working life. Financial incentives, educational background and industry affiliation are found to influence retirement behaviour. For low and medium incomes, the tax system shifts the incentives heavily towards early retirement and, in particular, towards partial retirement combined with part‐time work.

Suggested Citation

  • Erik Hernoes & Marte Sollie & Steinar Strøm, 2000. "Early Retirement and Economic Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 481-502, September.
    • Handle: RePEc:bla:scandj:v:102:y:2000:i:3:p:481-502
    DOI: 10.1111/1467-9442.00211
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-9442.00211
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-9442.00211?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, vol. 70(2), pages 207-236, November.
    2. David A. Wise, 1990. "Issues in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise90-1.
    3. John P. Rust, 1990. "Behavior of Male Workers at the End of the Life Cycle: An Empirical Analysis of States and Controls," NBER Chapters, in: Issues in the Economics of Aging, pages 317-382, National Bureau of Economic Research, Inc.
    4. Stern, Steven, 1997. "Approximate Solutions to Stochastic Dynamic Programs," Econometric Theory, Cambridge University Press, vol. 13(3), pages 392-405, June.
    5. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    6. Blau, David M., 1997. "Social security and the labor supply of older married couples," Labour Economics, Elsevier, vol. 4(4), pages 373-418, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vestad, Ola Lotherington, 2013. "Labour supply effects of early retirement provision," Labour Economics, Elsevier, vol. 25(C), pages 98-109.
    2. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics.
    3. Hernaes, Erik & Markussen, Simen & Piggott, John & Vestad, Ola L., 2013. "Does retirement age impact mortality?," Journal of Health Economics, Elsevier, vol. 32(3), pages 586-598.
    4. Christian Brinch & Erik Hernæs & Steinar Strøm, 2001. "Labour Supply Effects of an Early Retirement Programme," CESifo Working Paper Series 463, CESifo.
    5. Mona Larsen & Peder J. Pedersen, 2008. "Pathways to early retirement in Denmark, 1984‐2000," International Journal of Manpower, Emerald Group Publishing Limited, vol. 29(5), pages 384-409, August.
    6. Brenda Gannon & Jennifer Roberts, 2011. "Part-time work and health among older workers in Ireland and Britain," Applied Economics, Taylor & Francis Journals, vol. 43(30), pages 4749-4757.
    7. Hernæs, Erik & Zhu, Weizhen, 2009. "Pension Entitlements and Wealth Accumulation," Memorandum 12/2007, Oslo University, Department of Economics.
    8. Dahl, Svenn-Åge & Nilsen, Øivind Anti & Vaage, Kjell, 2002. "Gender Differences in Early Retirement Behaviour," Working Papers in Economics 02/02, University of Bergen, Department of Economics.
    9. Erik Hernæs & Zhiyang Jia & Steinar Strøm, 2003. "Macroeconomic Effects of Sectoral Shocks in Germany, the U.K. and, the U.S," CHILD Working Papers wp04_03, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    10. Erik Hernæs & Zhiyang Jia & Steinar Strøm, 2007. "Retirement in Non-Cooperative and Cooperative Families," Chapters, in: Koichi Hamada & Hiromi Kato (ed.), Ageing and the Labor Market in Japan, chapter 7, Edward Elgar Publishing.
    11. Holen, Dag S., 2007. "It Ain't Necessariy So," Memorandum 19/2008, Oslo University, Department of Economics.
    12. Vare, Minna, 2005. "Timing of the Early Retirement Decisions of Farming Couples," 94th Seminar, April 9-10, 2005, Ashford, UK 24412, European Association of Agricultural Economists.
    13. Kyrre Stensnes & Nils Martin Stølen, 2007. "Pension Reform in Norway. Microsimulating effects on government expenditures, labour supply incentives and benefit distribution," Discussion Papers 524, Statistics Norway, Research Department.
    14. Dennis Fredriksen & Nils Martin Stølen, 2005. "Effects of demographic development, labour supply and pension reforms on the future pension burden," Discussion Papers 418, Statistics Norway, Research Department.
    15. Johnsen, Julian V. & Vaage, Kjell, 2015. "Spouses’ retirement and the take-up of disability pension," Working Papers in Economics 03/15, University of Bergen, Department of Economics.
    16. Vare, Minna, 2005. "Spousal Effect and Timing of Farmers' Early Retirement Decisions," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24696, European Association of Agricultural Economists.
    17. Casas, Pablo & Román, Concepción, 2023. "Early retired or automatized? Evidence from the survey of health, ageing and retirement in Europe," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luca Spataro, 2002. "New Tools in Micromodeling Retirement Decisions: Overview and Applications to the Italian Case," CeRP Working Papers 28, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    2. Blau, David M. & Riphahn, Regina T., 1999. "Labor force transitions of older married couples in Germany," Labour Economics, Elsevier, vol. 6(2), pages 229-252, June.
    3. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-545, July.
    4. Bütler, Monika & Huguenin, Olivia & Teppa, Federica, 2004. "What Triggers Early Retirement? Results from Swiss Pension Funds," CEPR Discussion Papers 4394, C.E.P.R. Discussion Papers.
    5. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    6. Moller Dano, Anne & Ejrnaes, Mette & Husted, Leif, 2005. "Do single women value early retirement more than single men?," Labour Economics, Elsevier, vol. 12(1), pages 47-71, February.
    7. Coile Courtney, 2004. "Retirement Incentives and Couples' Retirement Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-30, July.
    8. Monika Bütler & Olivia Huguenin & Federica Teppa, 2005. "Why Forcing People to Save for Retirement May Backfire," University of St. Gallen Department of Economics working paper series 2005 2005-09, Department of Economics, University of St. Gallen.
    9. Monika Bütler & Olivia Huguenin & Federica Teppa, 2005. "Why Forcing People to Save Retirement May Backfire," Cahiers de Recherches Economiques du Département d'économie 05.05, Université de Lausanne, Faculté des HEC, Département d’économie.
    10. Hugo Benitez-Silva, 2000. "Micro Determinants of Labor Force Status Among Older Americans," Department of Economics Working Papers 00-07, Stony Brook University, Department of Economics.
    11. Endler, Johannes & Geyer, Johannes, 2017. "The Interaction of Pension System and Unemployment Insurance - Evidence from two Reforms," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168279, Verein für Socialpolitik / German Economic Association.
    12. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 781-863, Elsevier.
    13. Liebman, Jeffrey B. & Luttmer, Erzo F.P. & Seif, David G., 2009. "Labor supply responses to marginal Social Security benefits: Evidence from discontinuities," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1208-1223, December.
    14. Laun, Lisa, 2017. "The effect of age-targeted tax credits on labor force participation of older workers," Journal of Public Economics, Elsevier, vol. 152(C), pages 102-118.
    15. Hanel, Barbara, 2010. "Financial incentives to postpone retirement and further effects on employment -- Evidence from a natural experiment," Labour Economics, Elsevier, vol. 17(3), pages 474-486, June.
    16. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics.
    17. Tomasz Jedynak, 2022. "Does the Formulation of the Decision Problem Affect Retirement?—Framing Effect and Planned Retirement Age," IJERPH, MDPI, vol. 19(4), pages 1-30, February.
    18. Bingley, Paul & Gubta, Nabanita Datta & Pedersen, Peder J., 2001. "The Effects of Pension Programme Incentives on Retirement Behavior in Denmark," CLS Working Papers 01-8, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
    19. Diana Warren, 2008. "Retirement Expectations and Labour Force Transitions: The Experience of the Baby Boomer Generation," Melbourne Institute Working Paper Series wp2008n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    20. Mastrobuoni, Giovanni, 2011. "The role of information for retirement behavior: Evidence based on the stepwise introduction of the Social Security Statement," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 913-925, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:scandj:v:102:y:2000:i:3:p:481-502. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.