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Do notional defined contribution schemes prolong working life? Evidence from the 1994 Swedish pension reform

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  • Qi, Haodong
  • Helgertz, Jonas
  • Bengtsson, Tommy

Abstract

This paper investigates whether the Notional Defined Contribution (NDC) scheme prolongs working life. The evidence from the 1994 Swedish pension reform shows a gender and socio-economic gradient in the labor supply responses to phasing in NDC. While the reform exerted a large and significant positive effect on the average retirement age among highly educated and skilled, it had little or negative effect on those with low level of human capital. And the overall effect is more profound among older men, compared to older women. These findings imply that the aggregate impact of NDC may only be positive if the average level of older workers’ education and skills is high, whereas it may be moderate (or even adverse) if the majority of the older workers are less educated and engage in low-skill jobs. This highlights the importance of incorporating the gender and socio-economic aspects into the evaluation of how a multi-pillar pension scheme, such as NDC, may increase the average working life expectancy.

Suggested Citation

  • Qi, Haodong & Helgertz, Jonas & Bengtsson, Tommy, 2018. "Do notional defined contribution schemes prolong working life? Evidence from the 1994 Swedish pension reform," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 250-267.
    • Handle: RePEc:eee:joecag:v:12:y:2018:i:c:p:250-267
    DOI: 10.1016/j.jeoa.2016.11.001
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    Cited by:

    1. Anne M. Garvey & Manuel Ventura-Marco & Carlos Vidal-Meliá, 2021. "Does the pension system’s income statement really matter? A proposal for an NDC scheme with disability and minimum pension benefits," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 292-310, January.
    2. Haodong Qi & Kirk Scott & Tommy Bengtsson, 2019. "Extending working life: experiences from Sweden, 1981–2011," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 17(1), pages 099-120.
    3. Chłoń-Domińczak, Agnieszka & Strzelecki, Paweł & Łątkowski, Wojciech, 2020. "Pension reforms or consequences of the economic crisis? Measuring the changes of pension incomes in selected EU countries using APC approach," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    4. Michaël Boissonneault & Jaap Oude Mulders & Konrad Turek & Yves Carriere, 2020. "A systematic review of causes of recent increases in ages of labor market exit in OECD countries," PLOS ONE, Public Library of Science, vol. 15(4), pages 1-15, April.
    5. Madero-Cabib, Ignacio & Biehl, Andres, 2021. "Lifetime employment–coresidential trajectories and extended working life in Chile," The Journal of the Economics of Ageing, Elsevier, vol. 19(C).

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    More about this item

    Keywords

    Education;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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