Early Retirement Policy in the Presence of Competing Exit Pathways: Evidence from Pension Reforms in Finland

Abstract

I study the effects of changes in the eligibility age thresholds for unemployment and part-time pensions, and the effect of tightening medical criteria for disability pension eligibility in Finland. Particular attention is paid to the spillover effects of the pension reforms. These pension reforms jointly raised the average age at which workers leave employment by 3.9 months, mainly due to a sharp drop in disability pension enrolment from age 58 upwards and a lower incidence of unemployment at younger ages. These effects are heterogeneous, much of which is attributable to the spillover effects that vary across individuals.