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Increasing statutory retirement age, labor market outcomes, and effect heterogeneity: the 2017 pension reform in Finland

Published online by Cambridge University Press:  26 June 2025

Satu Nivalainen Open the ORCID record for Satu Nivalainen [Opens in a new window]  and
Ilari Ilmakunnas
Satu Nivalainen*
Affiliation:
Finnish Centre for Pensions, Eläketurvakeskus, Finland
Ilari Ilmakunnas
Affiliation:
Finnish Centre for Pensions, Eläketurvakeskus, Finland
*
Corresponding author: Satu Nivalainen; Email: satu.nivalainen@etk.fi
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Abstract

We study the 2017 pension reform in Finland, raising the statutory retirement age of the studied cohorts from 63 to 63 years and 6 months. Using monthly-based register data and a differences-in-differences approach, we estimate the reform’s impact on retirement, employment, unemployment, disability, sickness, and inactivity. Results indicate a significant 19-percentage-point increase in employment between the old and new retirement ages, alongside notable rises in unemployment, inactivity, and disability. Largely – but not entirely – this stems from the persistence of the previous labor market state. Gender differences are not large, but the effects vary considerably across education, income, employment sector, and self-employment status.

Keywords

genderlabor supplypolicy reformretirement agesocioeconomic inequalityJ14J26

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Type
Article
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Journal of Pension Economics & Finance , First View , pp. 1 - 26
Copyright
© The Author(s), 2025. Published by Cambridge University Press.

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