Introduction to "Social Security Programs and Retirement Around the World: Pension Reforms and the Health Distribution of Retirees"

The International Social Security (ISS) project compares the experiences of a dozen developed countries to study Social Security Programs and Retirement Around the World. The project was launched in the mid 1990s and was motivated by decades of decline in the labor force participation rate of older men. The first phases of the project documented that social security program provisions can create powerful incentives for retirement that are strongly correlated with the labor force behavior of older workers. Since then, countries have undertaken numerous reforms of their social security programs, disability programs, and other public benefit programs available to older workers. In a second stage of this project, we found that these reforms substantially reduced the implicit tax on work at older ages and that stronger financial incentives to work were positively correlated with labor force participation at older ages. In a third stage, we exploited time-series and cross-national variation in the timing and extent of reforms of retirement incentives and employed micro-econometric methods in order to show that the rising participation rates since the end of the 1990s have been caused by the pension reforms, in particular by the sharply increased financial incentives to work at older ages.
The pension reforms from the 1980s through 2020 may therefore be celebrated as a success story in fostering old-age labor force participation, which is important in the face of rapid demographic aging. However, there may be negative side effects as the reforms may have increased the income inequality among retirees. In the most recent stage of the project, we investigated this and found a heterogeneous picture with six out of ten countries where the reforms actually decreased income inequality. The main question to be answered by this final phase of the project is whether the reforms have increased health inequality among retirees. This is motivated by the fact that increasing the retirement age may harm workers in bad health more than those who are healthy. We use internationally comparable panel data, five different dimensions of health, and several ways to express health inequality. We do not find that health inequality has increased during the last two decades.