Early Retirement and Economic Incentives
The Scandinavian Journal of Economics, Vol. 102, Issue 3, September 2000
Posted: 18 Aug 2001
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 model with three states: full retirement, partial retirement/part-time work and full-time work. We then use the estimated model in simulations to study how financial incentives can be strengthened to extend working life. Financial incentives, educational background and industry affiliation are found to influence retirement behavior. For low and medium incomes, the tax system shifts the incentives heavily towards early retirement and, in particular, towards partial retirement combined with part-time work.
Suggested Citation: Suggested Citation