Incentives, Health, and Retirement : Evidence From a Finnish Pension Reform




Ollonqvist, Joonas; Kotakorpi, Kaisa; Laaksonen, Mikko; Martikainen, Pekka; Pirttilä, Jukka; Tarkiainen, Lasse

PublisherWiley

2025

Health Economics

Health Economics

1057-9230

1099-1050

DOIhttps://doi.org/10.1002/hec.4917

https://doi.org/10.1002/hec.4917

https://research.utu.fi/converis/portal/detail/Publication/478219648



This paper examines, using exogenous variation generated by a Finnish pension reform implemented in 2005, the interplay between health and financial incentives to postpone retirement. Based on detailed administrative data on individual health and retirement behavior, we focus on whether individual reactions to incentives vary according to health status and analyze whether individuals with ill health are also able to take advantage of the potential monetary benefits of delayed retirement created by the reform. We find that on average, individuals react to the financial incentives created by the reform as expected. This result holds for most of the health-related subgroups we analyze. However, those with a long period of sickness absence are less likely to respond to changes in the financial incentives to postpone retirement.


This research was financially supported by NORFACE (Grant No. 462–14-013), Yrjö Jahnsson foundation, the INVEST Research Flagship (Research Council of Finland decision number: 345546), the Finnish Centre of Excellence in Tax Systems Research (FIT) (Research Council of Finland decision numbers: 346250 and 346251), the European Research Council under the European Union's Horizon 2020 research and innovation programme (grant agreement No 101019329), the Strategic Research Council (SRC) within the Research Council of Finland grants for ACElife (\#352543–352572) and LIFECON (\#345219), and grants to the Max Planck—University of Helsinki Center from the Jane and Aatos Erkko Foundation, the Max Planck Society, University of Helsinki, and Cities of Helsinki, Vantaa and Espoo.


Last updated on 2025-12-02 at 11:32