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Labour Supply Response of a Retirement Earnings Test Reform

Author

Listed:
  • Hernæs, Erik

    (Ragnar Frisch Centre for Economic Research)

  • Jia, Zhiyang

    (Ragnar Frisch Centre for Economic Research)

Abstract
Norwegian administrative data are used to evaluate the impact of a doubling of the threshold in the earnings test on the labour force activity. We find no impact on labour market participation, but positive effects on earnings. The effect increases with exposure to the reform and is stronger for individuals with earnings around the threshold and with high education. Individuals who remain active until retirement age respond more to the reform than those who left labour force earlier. The results indicate both substantial labour supply responsiveness among elderly, and heterogeneity with respect to preferences, labour market options or both.

Suggested Citation

  • Hernæs, Erik & Jia, Zhiyang, 2009. "Labour Supply Response of a Retirement Earnings Test Reform," Memorandum 25/2009, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2009_025
    as

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2009/Memo-25-2009.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Retirement earnings test; Benefit entitlement; Labour supply behaviour; Heterogeneity;
    All these keywords.

    JEL classification:

    • 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

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