Forecasting the Impact of Pension Age Reform on Job Destruction Rates by Age in Denmark

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05-05-2021
MAKRO

The job destruction rate increases discretely at pension age and pension reform gradually delays the age at which this discrete increase takes place.

Abstract

I use register data from Statistics Denmark to compute job destruction rates by age in Denmark between 2011 and 2018. The job destruction rate increases discretely at pension age and pension reform gradually delays the age at which this discrete increase takes place. The period 2013 to 2018 reflects the first impact of pension reform which is visible at age 60 which is the age of early retirement. The impact of pension reform at age 65 is not yet visible but I can use the observed impact of age changes on early retirement and the planned changes in pension age to generate future life cycle profiles for the job destruction rate that incorporate the entire pension reform. These can then be used as inputs in models where the job destruction rate is exogenous.