Working Paper: NBER ID: w22018
Authors: Paul Bingley; Nabanita Datta Gupta; Peder Pedersen
Abstract: Longevity is increasing and many people are spending a greater proportion of their lives reliant on pensions to support consumption. In response to this, several countries have mandated delays to age of first entitlement to pension benefits in order to reduce incentives to retire early. However, it is unknown to what extent older individuals have the health capacity to sustain the longer working lives that delayed pension benefits may encourage. We estimate the health capacity to work longer in Denmark by comparing how much older individuals work today with how much those with similar mortality rates worked in the past, and how much younger individuals today with similar self-assessed health work. We find substantial health capacity for longer working lives among those currently aged 55 and above. We also find significant heterogeneity by education and gender. Those with a high school degree have the greatest additional work capacity, women have more additional capacity than men, especially women with a college degree.
Keywords: Health capacity; Older workers; Pension reform; Denmark; Labor force participation
JEL Codes: I14; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mortality (I12) | health-related work capacity (J28) |
| self-assessed health (SAH) (I14) | employment rates for younger cohorts (J69) |
| self-assessed health (SAH) (I14) | potential work capacity for older cohorts (J29) |
| education and gender differences (I24) | relationship between health and employment (I15) |
| historical employment rates at similar mortality levels (J17) | unused work capacity among individuals aged 55 and above (J14) |
| education level (I24) | unused work capacity (J22) |
| gender (J16) | unused work capacity (J22) |