Do reduced working hours for older workers have health consequences and prolong work careers?

Terhi Ravaska ()
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Terhi Ravaska: Tampere University & VATT Institute for Economic Research

No 6, Working Papers from Finnish Centre of Excellence in Tax Systems Research

Abstract: I examine the effects of reduced working hours on various health outcomes. I focus on individuals close to retirement and exploit a reform in part-time pen- sion rules. Using detailed register data on health and job spells together with a difference-in-differences approach, I find that an earlier eligibility age for part-time pension program increased purchases of prescription drugs by approximately 1.0 percentage point over the following 6 years. In relative terms, this effect is small, around 2%, but is economically significant as drug purchases are largely subsidized by the state. However, looking at the long-term effects I do not find effects on mortality or severe health diagnoses. I also look at labour market exits and find that the reform did not reduce the risk of early withdrawal from the labour market.

Keywords: taxation; emigration (search for similar items in EconPapers)
JEL-codes: H42 I11 I18 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2023-02
New Economics Papers: this item is included in nep-age, nep-eur and nep-mfd
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Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research

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