Labor Supply Effects of an Early Retirement Progam

42 Pages Posted: 3 Jun 2001

See all articles by Christian Brinch

Christian Brinch

University of Oslo

Erik Hernæs

University of Oslo - Ragnar Frisch Centre for Economic Research

Steinar Strøm

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

Date Written: April 2001

Abstract

In 1988, an early retirement program (AFP) was introduced in Norway for the 66-year-olds. Since then, AFP has gradually been extended and by now it covers workers aged 62-66. In this paper we employ a multinominal logit model to study the transition between states in the labor market. The model is estimated on a large panel data set covering the period 1988-2 to 1999-4. The estimated model tracks the development quite well, as also outside sample predictions do. The model is used to assess the future labor market impact of abolishing AFP. We find that by abolishing AFP may increase the labor force participation among older men (55-67) in 2005 from 72 percent in the baseline projection to 83 percent. For females the corresponding increase is from 62 to 67 percent.

Keywords: Early Retirement, Large Panel Data Sets, Econometric Models

JEL Classification: D10, H55, J26

Suggested Citation

Brinch, Christian and Hernæs, Erik and Strøm, Steinar, Labor Supply Effects of an Early Retirement Progam (April 2001). CESifo Working Paper Series No. 463. Available at SSRN: https://ssrn.com/abstract=270942

Christian Brinch

University of Oslo ( email )

PO Box 6706 St Olavs plass
N-0317 Oslo
Norway

Erik Hernæs

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

Gaustadalleen 21
N-0317 Oslo
Norway

Steinar Strøm (Contact Author)

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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