Pension Reform Disabled

Arbeitspapier

Old-age pension reform is on the agenda across the OECD, and a key target is to delay retirement. Most of these countries also have a disability insurance (DI) program accounting for a large share of labor force exits. This paper builds a quantitative life-cycle model with endogenous retirement to study how DI and old-age pension (OA-pension) systems interact with health and wages to determine retirement age, with particular focus on the macroeconomic effects of OA-pension reforms. Individuals face uncertain future health status and wages, and if in bad health they are eligible for DI if they choose to retire before reaching the statutory retirement age. I calibrate the model to the Norwegian economy and explore the effects of raising the statutory retirement age and cutting OA-pension on labor supply and public finances. The main contribution of the paper is that I, in contrast to standard macro pension models, include DI as another endogenous margin of retirement. I show that failure to account for this margin might severely bias the analysis of OA-pension reforms.

Object Details

• ISBN: 978-82-8379-004-7
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 20/2017

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; Social Security and Public Pensions ; Retirement; Retirement Policies
• Subject: retirement ; disability insurance ; life-cycle ; life-cycle

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Galaasen, Sigurd Mølster
• Event: Veröffentlichung
• (who): Norges Bank
• (where): Oslo
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/210130
• Last update: 10.03.2025, 11:43 AM CET