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Early Retirement Provision for Elderly Displaced Workers

Herman Kruse () and Andreas Myhre ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the economic effects on re-employment and program substitution behavior among elderly displaced workers who exogenously lose eligibility for their early retirement option. We use detailed Norwegian matched employer-employee data containing information on bankruptcy dates and individual-level wealth, income, pensions and social security benefits. Our empirical strategy employs a regression discontinuity design, as job displacement before a certain age cut-off results in losing eligibility for early retirement benefits between ages 62–67 years in Norway. We find that reemployment rates are indistinguishable between workers who just retain eligibility for early retirement benefits and those who just do not. Meanwhile, those who lose eligibility offset 69% of their lost benefits through take-up of other social security benefits, where 51% comes from disability insurance and 13% from unemployment insurance. Our findings are particularly policy relevant as tightening of age-limits for old-age pensions is on the agenda in several OECD countries, while current economic hardship throughout the region may lead to increased job displacement for elderly workers.

Keywords: early retirement; job displacement; labor supply; benefit substitution; social security (search for similar items in EconPapers)
JEL-codes: H55 I38 J14 J26 J65 (search for similar items in EconPapers)
Date: 2021-06-09
New Economics Papers: this item is included in nep-age, nep-eur, nep-ias, nep-isf and nep-pbe
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