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Assessing the effects of an early retirement program

Abstract

We investigate induced retirement effects of the Norwegian early retirement program “AFP” and emphasize effects caused by relocations of some individuals from disability pension and unemployment to AFP. Theoretical considerations predict that AFP unambiguously induces more early retirement. Analyzing Norwegian register data 1994–96 with parametric and non-parametric methods, we demonstrate that i) economic incentives influence the retirement decision, ii) there is a significant net induced retirement effect, iii) by a conservative judgment, at least 50% of the AFP retirees would have stayed in the labor force without the scheme.

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Correspondence to Espen Bratberg.

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All correspondence to Espen Bratberg. We are indebted to the referees for detailed remarks, which significantly improved the paper. Financial support from the Norwegian Research Council and the Ministry of Health and Social Affairs is greatly appreciated. We are grateful for valuable comments from Erik Hernæs and Astrid Grasdal, seminar participants at the Norwegian School of Management in Oslo, the Institute for International Economic Studies in Stockholm, and the University of Linz, the 2000 Conference of the European Society for Population Economics in Bonn, and the German-Norwegian Seminar on Social Insurance in Berlin, 2000. Bratberg would also like to thank the Humboldt University for its hospitality during a stay in the winter of 2003. Responsible editor: Christoph M. Schmidt.

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Bratberg, E., Holmås, T. & Thøgersen, Ø. Assessing the effects of an early retirement program. J Popul Econ 17, 387–408 (2004). https://doi.org/10.1007/s00148-003-0165-y

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  • DOI: https://doi.org/10.1007/s00148-003-0165-y

JEL classification

  • J26
  • H55
  • J22

Key words

  • Induced retirement
  • social security
  • matching estimators