The Labour Supply Effect of the Abolition of the Earnings Rule for Older Workers in the United Kingdom

Richard Disney () and Sarah Smith
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Richard Disney: University of Nottingham and IFS

No 17, CeRP Working Papers from Center for Research on Pensions and Welfare Policies, Turin (Italy)

Abstract: High effective tax rates on work at and around state pension age deter participation. An example is the ‘earnings test’ operating in several OECD countries. The United States abolished its test for the 65+ age group in 2000. The United Kingdom offers a ‘natural experiment’ of this reform, as it abolished its test, known as the ‘earnings rule',in 1989. We examine the effect of this change, taking account of the opportunity to defer pension rights. Abolition of the rule raised working hours of older male workers by around 4 hours a week, with a lesser impact on women’s behaviour.

Keywords: Labour supply; Retirement; Earnings Test (search for similar items in EconPapers)
JEL-codes: J22 J26 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2002-01
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Citations: View citations in EconPapers (91)

Published in The Economic Journal , Vol. 112, Issue 478, March 2002

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Journal Article: The Labour Supply Effect of the Abolition of the Earnings Rule for Older Workers in the United Kingdom (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:crp:wpaper:17

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