The Effects of Increasing the Eligibility Age for Public Pension on Individual Labor Supply: Evidence from Japan

Abstract

This paper investigates the effects of increasing the eligibility age for public pension on workers’ retirement decisions, focusing on recent Japanese public pension reforms. In Japan, the pensionable age for Employees’ Pension Insurance benefits gradually increased from 60 to 65 years for males over the course of a decade. Using large individual-level data and a regression discontinuity design, I find that raising the pensionable age for flat-rate benefits by one year increases male employment at the critical ages by about 7-8 percentage points. Individual labor supply at the critical ages are heterogeneous across degrees of closeness to the implementation date.