Anne Katrine Borgbjerg is a fourth-year PhD student at the Department of Economics and Business Economics, Aarhus University. She is also affiliated with the Pension Research Centre (PeRCent) at Copenhagen Business School. Anne Katrine holds a Master’s degree in Quantitative Economics (Cand.Oecon.) from Aarhus University.
Anne Katrine Borgbjerg uses Danish administrative data and state-of-the-art research methodology to answer societally important questions within the topics of pensions, ageing, and retirement. Her research interests are retirement economics, health economics, and labor economics.
Abstract
The effect of pension wealth on the timing of retirement (or labor supply in late working life) is analyzed based on panel data covering over 25 years. We use variation in pension wealth due to (temporary) early career differences in firm-specific contribution rates to mandatory funded pension schemes as identifying variation and study labor supply decisions from age 55 onward. Larger pension wealth is found to lead to earlier withdrawal from the labor market. The effect is increasing with age and growing as incentives to make early withdrawals are improving. At age 63, the pension wealth elasticity is around 0.3; that is, an increase of around 100,000 DKK (or 15,000 USD) in pension wealth at age 55 decreases earnings by 1% at age 63. A large part of the reduction in earnings and employment reflects an increase in the number of individuals who are „self-supporting“ in the sense of neither being employed nor receiving public transfers. While mandated savings requirements may succeed in increasing retirement savings, individuals may respond by retiring earlier, an effect that is important to incorporate in reform discussions on how to incentivize individuals to save more and retire later.
