Working Longer Under Strain: Retirement Reforms and Physical Job Demands

Torben M Andersen and Nicolai Kristensen

No 22146, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Increasing statutory retirement ages is a widely used response to population ageing, but workers may differ in their ability and incentives to work longer. We develop a model of retirement choice with discrete pension age thresholds, linking retirement bunching to economic incentives and the disutility of continued work. To proxy one determinant of this disutility, we construct individual measures of physical occupational strain accumulated over workers’ careers up to age 60. Using Danish administrative panel data and sequential increases in eligibility ages across birth cohorts, we examine the model’s empirical implications. The results are consistent with the model: the reforms delayed retirement and increased employment, with the largest responses among low-skilled and workers with high accumulated physical strain. Bunching at the earliest exit option became more pronounced, consistent with a rush-to-the-door effect. Although some substitution to other transfer programmes occurred, we quantify substantial net employment and fiscal-sustainability gains, generated disproportionately by workers with high accumulated physical strain.

Keywords: Retirement; retirement bunching; Physical occupational strain (search for similar items in EconPapers)
JEL-codes: H55 J14 J21 J26 J32 (search for similar items in EconPapers)
Date: 2026-11
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