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How Does Raising Women’s Retirement Age
Affect Labor Supply, Income, and Mortality?
Evidence from Switzerland
Rafael Lalive
University of
Lausanne
and CEPR
Stefan Staubli
University of Calgary
and RAND
Retirement Research Consortium Annual
Conference
Washington DC, August 2014
NBER (SSA) funding gratefully acknowledged (NB14-09)Lalive and Staubli
Raising Women’s Retirement Age
1 / 20
Research Question
• How does raising women's full retirement age (FRA)
affect labor supply, income, and mortality?
• Demographic aging puts financial pressure on social
security programs
• Raising the retirement age is the key policy reform to
deal with financial pressure
• People claim for shorter duration
• People stay in labor force longer
• Potential concerns: negative effect on health and spillover
effects onto other government programs (e.g. disability
insurance)
• Little empirical evidence on impact of large changes to
FRA
Raising Women’s Retirement Age
Lalive and Staubli
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What We Do
• Swiss FRA before 2001: 62 for women and 65 for men
• We study the effects of raising women’s FRA
• 1997 Law announced increase in women’s FRA via
penalty of 3.4% per year:
• FRA is 63 if born after Dec. 31, 1938 (i.e. cohorts retiring in
2001)
• FRA is 64 if born after Dec. 31, 1941 (i.e. cohorts retiring in
2005)
• Institutional comparison to U.S.
• Labor force participation rates of women are very similar
• No earnings test in Switzerland: labor supply effects might
be smaller in U.S. context
Raising Women’s Retirement Age
Lalive and Staubli
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Generosity of Old-Age Pensions
90
10
011
01
20
13
0In
de
xed
be
ne
fits
(10
0=
ag
e 6
2,
bo
rn <
19
38
)
62 63 64 65 66 67 68 6970
AgeBorn <1939 Born 1939−1941Born >1941
Lalive and Staubli
Raising Women’s Retirement Age
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Data and Outcome Variables
• Data Sources:
• Administrative data on pension contributions and claims
• Labor market histories from 1982-2012
• 25% random sample of individuals and their spouse
• Sample: women with labor force attachment affected by
reforms (born 1939/1942) and not affected by reforms
(born in 1938/1941)
• Key variables
• Exit age: last age an individual has positive earnings
• Claiming age: age individual starts claiming disability/old-age
pension
• Mortality: Indicator(died by end of 2012)
• Income: amount of benefits and social security wealth (net-
present value of benefits)
Raising Women’s Retirement Age
Lalive and Staubli
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Birth Date Regression Discontinuity Design (RDD)
• Estimate effects by exploiting discontinuity in FRA by
birth date
• Treatment groups: women born in 1939/1942
• Control groups: women born in 1938/1941
• Perform analysis by month of birth
Raising Women’s Retirement Age
Lalive and Staubli
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2001 Change
• FRA 62 ⇒ 63
• Penalty 3.4%
• Informed 4 years in advance
Raising Women’s Retirement Age
Lalive and Staubli
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FRA 62⇒63: Women’s Exit Ages59
.560
60.5
6162
62.5
Age
61.5
63
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
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FRA 62⇒63: Women’s Exit Ages59
.560
60.5
61A
ge61
.562
62.5
63
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
8 / 20
FRA 62⇒63: Women’s Claiming Ages60
.561
61.5
62A
ge62
.563
63.5
64
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
9 / 20
FRA 62⇒63: Women’s Claiming Ages60
.561
61.5
62A
ge62
.563
63.5
64
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
9 / 20
FRA 62⇒63: Effects on Women’s Labor Supply Profile
0.2
.4.6
.81
Pe
rce
nt
50 55 60 65 70 75Age
1938
1939Lalive and Staubli
Raising Women’s Retirement Age
10 / 20
FRA 62⇒63: RDD Effects on Unemployment Inflow
−4
−2
02
4
53 54 55 56 57 58 59 60Age
61 62 63 64 65
Lalive and Staubli
Raising Women’s Retirement Age
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FRA 62⇒63: RDD Effects on Disability Inflow−
20
24
53 54 55 56 57 58 59 60Age
61 62 63 64 65
Lalive and Staubli
Raising Women’s Retirement Age
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FRA 62⇒63: Spillover Effect on Exit Age of Spouse?
62
62
.56
3A
ge
6
3.5
64
64
.56
56
5.5
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff, wife
Lalive and Staubli
Raising Women’s Retirement Age
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FRA 62⇒63: Impact on Mortality?
0.0
5P
r(d
ie b
y 2
01
2)
.1.1
5.2
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
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FRA 62⇒63: Change in BenefitsS
wis
s fr
an
cs1
60
00
17
00
0
1
80
00
19
00
0
2
00
00
21
00
0
2
20
00
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
15 / 20
FRA 62⇒63: Change in Social Security WealthS
wis
s fr
an
cs4
00
00
0
4
20
00
0
4
40
00
0
4
60
00
0
4
80
00
0
5
00
00
0
−12 −9 −6 −3 0 3 6 9 12Birth date − cutoff
Lalive and Staubli
Raising Women’s Retirement Age
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2005 Change
• FRA 63 ⇒ 64
• Penalty 3.4%
• Informed 8 years in advance
Raising Women’s Retirement Age
Lalive and Staubli
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FRA 63⇒64: Effects on Women’s Labor Supply Profile
0.2
.4.6
.81
Pe
rce
nt
50 55 60 65 70 75Age
1941
1942Lalive and Staubli
Raising Women’s Retirement Age
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Summary of RDD Estimates
FRA 62 to 63 years
FRA 63 to 64 years
A. Labor supply and claiming
effects
Exit age (years)
0.66***
(0.19)
0.53***
(0.08)
0.58***
(0.17)
0.55***
(0.09)
Claiming age (years)
B. Health and income effects
Mortality, indicator(died by end of
2012)
0.004(0.011)
-329(219)
-14,489***
(4,939)
0.016*(0.008)
-278(204)
-13,296**
*(4,439)
Social security benefits
Social security
wealth
# Observation 11,329 13,912
Lalive and Staubli
Raising Women’s Retirement Age
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Summary
• Exploit reform in Switzerland that increased FRA for
women
⇒Creates sharp discontinuities in financial incentives to claim
benefits
• Main findings:
1. Significant delay in benefit claiming and labor market exit
2. No impact on benefits but reduction in social security
wealth
3. Some increase in mortality but not very precisely estimated
⇒Data update for full population and more recent yearsRaising Women’s Retirement Age
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Lalive and Staubli