Early Retirement and Economic Incentives

The Scandinavian Journal of Economics, Vol. 102, Issue 3, September 2000

Posted: 18 Aug 2001

See all articles by Erik Hernæs

Erik Hernæs

University of Oslo - Ragnar Frisch Centre for Economic Research

Marte Sollie

Statistics Norway

Steinar Strøm

University of Oslo - Ragnar Frisch Centre for Economic Research; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

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

Hernæs, Erik and Sollie, Marte and Strøm, Steinar, Early Retirement and Economic Incentives. The Scandinavian Journal of Economics, Vol. 102, Issue 3, September 2000. Available at SSRN: https://ssrn.com/abstract=247662

Erik Hernæs (Contact Author)

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

Marte Sollie

Statistics Norway

N-0033 Oslo
Norway

Steinar Strøm

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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