Do notional defined contribution schemes prolong working life? Evidence from the 1994 Swedish pension reform

Haodong Qi, Jonas Helgertz, Tommy Bengtsson

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

This paper investigates whether the Notional Defined Contribution (NDC) scheme prolongs working life. The evidence from the 1994 Swedish pension reform shows a gender and socio-economic gradient in the labor supply responses to phasing in NDC. While the reform exerted a large and significant positive effect on the average retirement age among highly educated and skilled, it had little or negative effect on those with low level of human capital. And the overall effect is more profound among older men, compared to older women. These findings imply that the aggregate impact of NDC may only be positive if the average level of older workers’ education and skills is high, whereas it may be moderate (or even adverse) if the majority of the older workers are less educated and engage in low-skill jobs. This highlights the importance of incorporating the gender and socio-economic aspects into the evaluation of how a multi-pillar pension scheme, such as NDC, may increase the average working life expectancy.

Original languageEnglish (US)
Pages (from-to)250-267
Number of pages18
JournalJournal of the Economics of Ageing
Volume12
DOIs
StatePublished - Nov 2018
Externally publishedYes

Bibliographical note

Funding Information:
We acknowledge financial support from the European Union's Seventh Framework Programme for research, technological development and demonstration under Grant Agreement No. 613247, Centre for Economic Demography at Lund University, Knut Wicksell Centre for Financial Studies at Lund University, and the Swedish Research Council (Vetenskapsr?det) via the Linnaeus Center for Social Policy and Family Dynamics in Europe (SPaDE), grant registration number 349-2007-8701. We are grateful to Anna Amilon, David Canning, Kerstin Enflo, Alexia F?rnkranz-Prskawetz, Hans Groth, Jan Lanke, Jeff Neilson, Peng Nie, Albert Park, Miguel Sanchez, Alfonso Sousa-Poza, and Feng Wang for their helpful comments.

Funding Information:
We acknowledge financial support from the European Union’s Seventh Framework Programme for research, technological development and demonstration under Grant Agreement No. 613247 , Centre for Economic Demography at Lund University, Knut Wicksell Centre for Financial Studies at Lund University, and the Swedish Research Council (Vetenskapsrådet) via the Linnaeus Center for Social Policy and Family Dynamics in Europe (SPaDE), grant registration number 349-2007-8701. We are grateful to Anna Amilon, David Canning, Kerstin Enflo, Alexia Fürnkranz-Prskawetz, Hans Groth, Jan Lanke, Jeff Neilson, Peng Nie, Albert Park, Miguel Sanchez, Alfonso Sousa-Poza, and Feng Wang for their helpful comments.

Publisher Copyright:
© 2016 Elsevier B.V.

Keywords

  • Education
  • Occupation
  • Pension
  • Reform
  • Retirement

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