An evaluation of the labour market response of eliminating the retirement earnings test rule
In this analysis, we evaluate the labour force activity effect of abolishing the retirement earnings test for the age group 67-69. The report starts with an empirical overview of labour force participation and earnings for the age group 67-70. We then predict the impact of abolishing the earnings test by using both a transition model and a structural model. Both models predict that abolishing the earnings test would have increased labour force participation of persons aged 67 to 69, by 0.5 to 1 percentage points. The structural model indicates that about two thirds of the extra cost to the National Insurances System would have been offset by increased tax, half from tax rules and half from increased labour supply.
Hernæs, Erik and Zhiyang Jia
Nummer i serie: 1
Prosjekt:1133 - Eldres velferd og arbeidsmarkedstilknytning
Research Council of Norway