Salience and Social Security Benefits

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Brinch, C.N., E. Hernæs, Z. Jia




Journal of Labor Economics

Vol 35(1)

Sammendrag (engelsk)

We study the effect of salience in the social security benefit system on labor earnings by exploiting kinks and notches in budget lines introduced by earnings testing and social security accrual mechanisms for 67- to 69-year-old workers in Norway. An earnings test had large effects on labor earnings, while an accrual system discontinuity had no discernible effects. We interpret the difference as likely to be caused by a lack of salience in the accrual incentives: agents are not able or willing to take into account the value of future benefit increases when considering the relevant rewards for working.

Prosjekt info:

Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.: 220746
Frisch prosjekt: 1175 - Arbeidslivet etter pensjonsreformen