How Does Raising Women's Full Retirement Age Affect Labor Supply, Income, and Mortality? Evidence from Switzerland
NBER Retirement Research Center Paper No. NB 14-09
Issued in September 2015
Understanding why and when individuals retire is central to the current debate on pension reform. We study how women change their employment decisions in response to a Swiss reform that increased the full retirement age (FRA) twice, from 62 to 63 years, and from 63 years to 64 years, by date of birth. We find that raising the FRA strongly affects women's labor supply. A one year increase in the FRA delays labor market exit by 7.9 months and claiming of retirement benefits by 6.6 months. We neither find an effect on labor supply nor on benefit claiming of affected women's spouses. Mortality increases somewhat but the effect is not precisely estimated. Increasing the FRA has no statistically significant effect on the level of social security benefits but lowers social security wealth. Increasing the FRA by two years reduces the present discounted cost of a retiree by 10%.
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