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

Qi, Haodong LU ; Helgertz, Jonas LU and Bengtsson, Tommy LU (2016) In Journal of the Economics of Ageing
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... (More)

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.

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organization
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Contribution to journal
publication status
epub
subject
keywords
Education
in
Journal of the Economics of Ageing
publisher
Elsevier
external identifiers
  • scopus:85007494353
ISSN
2212-828X
DOI
10.1016/j.jeoa.2016.11.001
language
English
LU publication?
yes
id
b4c29c44-7689-478d-bc02-4a30a17fc774
date added to LUP
2017-02-21 12:19:38
date last changed
2017-06-26 10:53:47
@article{b4c29c44-7689-478d-bc02-4a30a17fc774,
  abstract     = {<p>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.</p>},
  author       = {Qi, Haodong and Helgertz, Jonas and Bengtsson, Tommy},
  issn         = {2212-828X},
  keyword      = {Education},
  language     = {eng},
  month        = {11},
  publisher    = {Elsevier},
  series       = {Journal of the Economics of Ageing},
  title        = {Do notional defined contribution schemes prolong working life? Evidence from the 1994 Swedish pension reform},
  url          = {http://dx.doi.org/10.1016/j.jeoa.2016.11.001},
  year         = {2016},
}