Retirement Consumption and Pension Design

Jonas Kolsrud, Camille Landais, Daniel Reck and Johannes Spinnewijn

American Economic Review, 2024, vol. 114, issue 1, 89-133

Abstract: This paper analyzes consumption to evaluate the distributional effects of pension reforms. Using Swedish administrative data, we show that on average, workers who retire earlier consume less while retired and experience larger drops in consumption around retirement. Interpreted via a theoretical model, these findings imply that reforms incentivizing later retirement incur a substantial consumption smoothing cost. Turning to other features of pension policy, we find that reforms that redistribute based on early-career labor supply would have opposite-signed redistributive effects, while differentiating on wealth may help to target pension benefits toward those who are vulnerable to larger drops in consumption around retirement.

JEL-codes: E21 G51 H23 H55 J22 J26 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Retirement consumption and pension design (2024)
Working Paper: Retirement Consumption and Pension Design (2023)
Working Paper: Retirement Consumption and Pension Design (2021)
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DOI: 10.1257/aer.20221426

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