Max Planck Institute for Social Law and Social Pol
Institutional Affiliation: Max Planck Institute for Social Law and Social Policy
NBER Working Papers and Publications
|February 2018||Earnings Test, Non-actuarial Adjustments and Flexible Retirement|
with Axel H. Börsch-Supan, Duarte N. Leite: w24294
In response to the challenges of increasing longevity, an obvious policy response is to gradually increase the statutory eligibility age for public pension benefits and to shut down pathways to early retirement such as special rules for women. This is, however, very unpopular. As an alternative, many countries have introduced “flexibility reforms” which allow combining part-time work and partial retirement. A key measure of these reforms is the abolishment of earnings tests. It is claimed that these reforms increase labor supply and therefore, also the sustainability of pension systems. We show that these claims may not be true in the circumstances of most European countries.
To this end, we employ a life-cycle model of consumption and labor supply where the choices of labor force exit an...
Published: Axel Börsch-Supan & Klaus Härtl & Duarte N. Leite, 2018. "Earnings test, non-actuarial adjustments and flexible retirement," Economics Letters, vol 173, pages 78-83. citation courtesy of