Does a higher minimum pension increase retirement?

Abstract

This report examines the impact of guarantee pension. The empirical analysis is based on nationwide Finnish registry data. Causal effects are investigated using the ‘differences-in-differences’ method. It compares the change in retirement for those eligible for the guarantee pension with a control group in the context of the 2011 guarantee pension reform. Our results show that the introduction of the guarantee pension increased the retirement of individuals on the verge of old-age retirement by approximately three percentage points, or seven percent. For individuals not employed, the impact was greater, as retirement increased by sixteen percent, or seven percentage points. We do not observe a similar effect for those who were employed. According to these results, the guarantee pension reform had a significant impact on retirement decisions in Finland.This report examines the impact of guarantee pension. The empirical analysis is based on nationwide Finnish registry data. Causal effects are investigated using the ‘differences-in-differences’ method. It compares the change in retirement for those eligible for the guarantee pension with a control group in the context of the 2011 guarantee pension reform. Our results show that the introduction of the guarantee pension increased the retirement of individuals on the verge of old-age retirement by approximately three percentage points, or seven percent. For individuals not employed, the impact was greater, as retirement increased by sixteen percent, or seven percentage points. We do not observe a similar effect for those who were employed. According to these results, the guarantee pension reform had a significant impact on retirement decisions in Finland.

• ISSN: 2242-6914
• ISBN: 978-952-209-204-5
• JEL: I38, J26
• Publication in PDF-format