The Effect of Relabeling and Incentives on Retirement : Evidence from the Finnish Pension Reform in 2005
Gruber, Jon; Kanninen, Ohto; Nivalainen, Satu; Ravaska, Terhi; Uusitalo, Roope (2019-06-06)
Gruber, Jon
Kanninen, Ohto
Nivalainen, Satu
Ravaska, Terhi
Uusitalo, Roope
Labour Institute for Economic Research
06.06.2019
Working papers : 3
Tiivistelmä
We exploit a reform in the Finnish public pension system in 2005 to study the effect of financial incentives
(wealth effect and substitution effect) and relabeling of pensions on retirement decisions. These effects
are distinguishable in the reform due to a heterogeneous, although correlated, impact of the reform
on individuals. Relabeling in the reform means renaming the pension type from early retirement to full
retirement based on age. Incentives were affected as a function of age and accrual-to-earnings ratio. We
find that all three effects played a role. We show that the relabeling alone explains most
of the immediate behavioral impact of the reform.
(wealth effect and substitution effect) and relabeling of pensions on retirement decisions. These effects
are distinguishable in the reform due to a heterogeneous, although correlated, impact of the reform
on individuals. Relabeling in the reform means renaming the pension type from early retirement to full
retirement based on age. Incentives were affected as a function of age and accrual-to-earnings ratio. We
find that all three effects played a role. We show that the relabeling alone explains most
of the immediate behavioral impact of the reform.
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