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Labor Supply and the Pension Contribution-Benefit Link

Eric French (), Attila Lindner, Cormac O'Dea and Tom Zawisza

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We estimate the impact of public pension systems on labor supply far from the normal retirement age by exploiting Poland's switch from a Defined Benefit to a Notional Defined Contribution scheme for men born after 1948. Using the universe of taxpayers and this sharp cohort-based discontinuity in the link between current contributions and future benefits, we estimate an employment elasticity with respect to the return to work of 0.44 for ages 51-54. We estimate a lifecycle model that matches these results. The model implies that the change in the contribution-benefit link from the reform increases employment among those in their 30s but decreases it at older ages, reducing overall labor supply across the lifecycle by 2 months.

Keywords: Labor supply; pensions; contribution-benefit link; defined benefit; defined contribution (search for similar items in EconPapers)
JEL-codes: D15 H55 J22 J26 (search for similar items in EconPapers)
Date: 2022-08-22
New Economics Papers: this item is included in nep-age, nep-eur and nep-tra
Note: ebf26
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Working Paper: Labor Supply and the Pension Contribution Benefit Link (2022)
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