Working Paper: NBER ID: w30184
Authors: Eric French; Attila S. Lindner; Cormac O'Dea; Tom A. Zawisza
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; Pension Reform; Public Policy
JEL Codes: D15; H55; J22; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tightening the link between contributions and future benefits (H55) | alleviate labor supply distortions caused by SSCs (J89) |
| NDC pension system introduction (H55) | reduction of employment rates among men aged 51-53 in high-growth regions (J69) |
| NDC pension system introduction (H55) | labor supply response to changes in future pension benefits (J26) |