Family labour supply when the husband is eligible for early retirement.

When the husband works in the private sector in Norway the take-up rate of early retirement during the first twelve months after becoming eligible (once during 1993 and 1994) was around 40 percent. If the husband works in the public sector the corresponding take-up rate was around 25 percent. A model with forward-looking and utility maximising merried couples, where the husband only is eligible for early retirement, has been estimated on these data. The estimated model has been used to predict the labour supply responses of the husband and wife when pensions are taxed as wage earnings. Taxing early benefits as labour earnings induces a substantial decline in retirement and a substantial shift towards full-time work among males. Females tent to decrease their labour supply a little. An additionsl 10 percent in the pre-tax pensionincome has a positive impact on full-time work among both spouses, but the effect is a magnitude smaller than the effect obtained by changing taxation. Husbands in poor households tend to increase their labour supply more than husbands in rich households. Poor households are also more negatively hit in terms of loss in expected household welfare than the rich households.Early retirement; married couples; microeconometrics

Fewer in number but harder to employ: Incidence and duration of unemployment in an economic upswing

During the upswing in the Norwegian labour market after the peak of unemployment in the post-war period in the early 1990s, the inflow to unemployment fell by one fourth from October 1991 to October 1993. In contrast, the expected unemployment duration remained fairly constant, whether measured by the duration of registered unemployment or by the duration of joblessness. The continued high duration of unemployment was partly due to a decrease in average ‘employability’ in the unemployment inflow: more immigrants from non-western countries, more without job experience, more with previous unemployment experience, lower average previous earnings, and fewer on recall notice

Labour Supply Effects of an Early Retirement Programme

In 1988, an early retirement program (AFP) was introduced in Norway for the 66-years-old. Since then, AFP has gradually been extended and by now it covers workers aged 62-66. In this paper we employ a multinominal logit model to study the transition between states in the labour market. The model is estimated on a large panel data set covering the period 1988-2 to 1999-4. The estimated model tracks the development quite well, as also outside sample predictions do. The model is used to assess the future labour market impact of abolishing AFP. We find that by abolishing AFP may increase the labour force participation among older men (55-67) in 2005 from 72 percent in the baseline projection to 83 percent. For females the corresponding increase is from 62 to 67 percent.Early retirement, large panel data sets, econometric models

Retirement in Non-Cooperative and Cooperative Families

Models that allow for non-cooperative as well as cooperative behavior of families are estimated on data from Norway in 1993 and 1994. The husband is eligible for early retirement while the wife is not. The models aim at explaining labor supply behavior of married couples the first twelve months after the husband became eligible for early retirement. Estimates and predictions derived from the different models are compared. Yet, no definite conclusion is reached with respect to what model is best at explaining the observed behavior. The models are employed to simulate the impacts on labor supply of taxing pension income the same way as labor income. We find that that this change of the tax system may reduce the propensity to retire early considerably.Family labor supply, retirement, econometric models, policy simulations

Earning distribution and labour supply after a retirement earnings test reform

Norwegian administrative data are used to evaluate the impact of a doubling of the threshold in the retirement earnings test. We find almost no impact on the extensive margin, but a positive effect on the intensive margin. This positive effect is uneven over the earnings distribution, and concentrated on workers around the threshold, increasing with exposure to the reform and leading to a decrease in earnings inequality. Individuals who remain active until retirement age respond more to the reform. Conditional on pre-reform earnings, we find little evidence that individual characteristics such as working histories influence the responsiveness to the reform

Labour supply response of a retirement earnings test reform

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

Pension entitlements and wealth accumulation

Variation in non-pension wealth accumulation with the level of expected pensions is investigated with a register based, linked employer-employee dataset. This includes wealth components, earnings history and demographic information, supplemented with detailed calculations of public and occupational pension entitlements, allowing construction of full life time income trajectories. Regressions are run on the half of the population with some wealth and therefore the option of consumption smoothing. The results imply substantial offsets of pension wealth against other private wealth, mostly financial. Although pension benefits are related to earnings, the regressive structure of the public pension and incomplete coverage of occupational pensions provide independent variation in pensions. Panel estimation provides support for the cross section results. Heterogeneity and selection bias are investigated with estimation on a variety of sub-samples

Retirement in Non-Cooperative and Cooperative Families

Models that allow for non-cooperative as well as cooperative behavior of families are estimated on data from Norway in 1993 and 1994. The husband is eligible for early retirement while the wife is not. The models aim at explaining labor supply behavior of married couples the first twelve months after the husband became eligible for early retirement. Estimates and predictions derived from the different models are compared. Yet, no definite conclusion is reached with respect to what model is best at explaining the observed behavior. The models are employed to simulate the impacts on labor supply of taxing pension income the same way as labor income. We find that that this change of the tax system may reduce the propensity to retire early considerably

Early retirement and economic incentives

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

Labour Supply Effects of an Early Retirement Programme

In 1988, an early retirement program (AFP) was introduced in Norway for the 66-years-old. Since then, AFP has gradually been extended and by now it covers workers aged 62-66. In this paper we employ a multinominal logit model to study the transition between states in the labour market. The model is estimated on a large panel data set covering the period 1988-2 to 1999-4. The estimated model tracks the development quite well, as also outside sample predictions do. The model is used to assess the future labour market impact of abolishing AFP. We find that by abolishing AFP may increase the labour force participation among older men (55-67) in 2005 from 72 percent in the baseline projection to 83 percent. For females the corresponding increase is from 62 to 67 percent