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Social Security Programs and Retirement around the WorldReforms and Retirement Incentives$
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Axel Börsch-Supan and Courtney C. Coile

Print publication date: 2021

Print ISBN-13: 9780226674100

Published to Chicago Scholarship Online: September 2021

DOI: 10.7208/chicago/9780226674247.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 26 June 2022

A Lifetime of Changes

A Lifetime of Changes

State Pensions and Work Incentives at Older Ages in the UK, 1948–2018

Chapter:
(p.397) 11 A Lifetime of Changes
Source:
Social Security Programs and Retirement around the World
Author(s):

James Banks

Carl Emmerson

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226674247.003.0011

We describe the history of state pension policy in the UK since 1948 and calculate summary measures of the generosity of the system over time and the degree to which it created implicit taxes on, or subsidies to, work at older ages. The time series of these measures, calculated separately for ’example-type’ individuals of different birth cohorts, education and sexes, are then related to the time-series of employment rates at older ages for the equivalent types of individuals. The generosity of the system rose over the period as a whole but has fallen in recent years, and in contrast to many countries there were generally never large implicit taxes on work arising from the state pension system. What implicit subsidies there were in the years immediately before the State Pension Age have been gradually eliminated and the system is now broadly neutral with regard to work incentives. Exploiting variation in pension wealth and work incentives across different cohort-education-sex groups, created by the timing and phasing of pension reforms, we show that both pension wealth and the implicit work disincentives in the pension system are correlated with employment outcomes for men, with the expected negative sign.

Keywords:   older workers, pension reform, incentives, employment, earnings, United Kingdom, implicit tax, working longer

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