Risks of a new retirement age: will poverty and unemployment increase?

Abstract

Successful implementation of pension reforms involves the formation of effective mechanisms to support both those who remain in the workforce and those that leave generations beyond the working age. The purpose of the article is to identify and assess the effects of raising the retirement age on the situation in the labor market and possible changes in the level of household welfare due to the fact that part of the population of preretirement age will remain in the labor force for five years longer. The initial data for the analysis and modeling were the data of a representative survey on the project “Russian monitoring of the economic situation and public health – HSE" for 2017. Object of analysis are women aged 55 years and older and men from 60 years and older. In the study, microsimulation, in which all men aged from 60 to 65 years and women from 55 to 60 years were conditionally displaced into the working-age population, and estimates of changes in their employment and incomes were obtained. On the basis of the econometric model, the factors that are after labor retirement incentives are specified. The presented calculations indicated that, despite the increase in labor supply due to an increase in the retirement age, there would be no surplus in the labor market. Currently, the level of poverty among retired households is significantly lower than the average level of poverty, and this trend will continue in the future. The study revealed new trends in that: 1) with the growth of the educational level, the probability of employment after the onset of retirement age increases; 2) other things being equal, women after retirement have a greater chance of continuing to work than men. The results are important for the adjustment of social policy in respect of pensioners.

Keywords

• pensioners
• household
• employment
• income
• able-bodied population