Pension reform and labor supply

Link to article:



Hernæs, Erik, Simen Markussen, John Piggott, Knut Røed




Journal of Public Economics

Vol 142, 39-55.


We exploit a comprehensive restructuring of the early retirement system in Norway in 2011 to examine labor supply responses to increases in work incentives and actuarially neutral reductions in the age of first access to pension benefits. We find that increasing the returns to work is a powerful policy: The removal of an earnings test, implying a doubling of the average net take-home wage, led to an increase in average labor supply by 7 h per week (30%) at age 63 and by 8 h (46%) at age 64. The responses primarily came at the extensive margin. In contrast, reducing the access age has almost no effect on labor supply, in our setting with actuarially fair work incentives.


D6; H3; J1; J2


Early retirement; Labor supply; Pension reform; Program evaluation


Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.: 220746
Frisch prosjekt: 1175 - Working life after the Norwegian pension reform

Oppdragsgiver: Norges Forskningsråd
Oppdragsgivers prosjektnr.: 238203
Frisch prosjekt: 1177 - Understanding retirement decisions