Aging, Productivity, Workforce diversity, Linked employer-employee data, D24, J10, J24, J31,

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Aim: We examine the relationship between the subjective assessment of health status and retirement by using information on expected and actual retirement ages. Methods: Subjective data from cross-sectional surveys, conducted in Finland in 2003 and 2008, are linked to information on actual retirement age from register data from 2003 to 2013. Regression models are estimated for actual and expected retirement ages. Results: While the health status is positively correlated with both actual and anticipated full-time retirement age, the actual age of retirement is less sensitive to health. On average, individuals tend to retire later than they had anticipated. We examine potential biases in the health-retirement relationship. Measurement error in regard to health status biases the results downwards. Using data on observed retirement ages, omitting those who do not retire during the data period, leads to a selection problem. Ignoring the selection also leads to a downwards bias in the health-retirement age connection. As a more exogenous health variable we use health shocks, which are measured by average annual days of absence due to sickness in the follow-up period. These shocks are negatively related to retirement age in a subsample of initially healthy individuals. Conclusions: When subjective assessment of health is used for explaining retirement behavior, the effects of health can often be underestimated rather than overestimated. To lengthen working careers, attention should be given to both the ability (health) and willingness (perceptions of proper retirement age) of people to continue longer at work.

Among EU15 countries Finland has witnessed the largest increase in the employment of ageing workers since the late 1990s. In these years there was a rapid change from the policy of promoting early retirement to the policy of promoting staying at work. Furthermore, this rapid shift to a restrictive early exit policy took place in a situation that was especially demanding due to exceptionally high unemployment among elderly employees. This paper considers why and how the Finnish policy has been successful earlier than other EU countries in encouraging ageing workers to stay on at work. We argue that the positive change in employment is an outcome of the interplay between favourable economic trends and wide-scale work promotion measures. These work promotion measures include the restrictive changes in early retirement schemes. A severe recession in the early 1990s is an important background factor both for the increased need for reforms in the early retirement schemes and also for making the reforms politically more acceptable. The Geneva Papers (2005) 30, 674-692. doi:10.1057/palgrave.gpp.2510049Keywords: employment rates; older workers; early retirement; retirement age; pension policy Introduction Throughout Europe, there is a concern about how to encourage people to stay on at work for more years. Raising the employment levels is the crucial element for making the EU the most competitive economy in the world over the decade [2000][2001][2002][2003][2004][2005][2006][2007][2008][2009][2010]. In addition to the target for the overall employment rate (70 per cent by 2010), particular goals are set for raising the employment rate for ageing persons. The aim, set at the Stockholm European Council, is to raise the employment rate for 55-64 year-olds to 50 per cent by 2010.The target for the employment of older workers has recently been reached in Finland, although the overall employment rate has decreased somewhat in [2003][2004] and is some three percentage points below the target level. Finland has actually witnessed the largest increase in the employment of ageing workers since the late 1990s among the EU15 countries. In this respect, one can argue that Finland has been the best performer in the EU, and lessons from the Finnish case should be considered.Explanations for a positive development of this type are naturally of prime interest. The role of policies is a question that needs to be addressed in particular. It is quite obvious that favourable economic conditions cannot be the sole explanation for the sharp rise in the employment among ageing workers in Finland. The rise in their employment is so much greater than in the population at large that the reforms of In Finland, the change from a policy promoting early retirement to that of staying at work has been rapid. The unemployment pension scheme was created in the early 1970s, but other early retirement schemes (individual early retirement pension, early old-age pension and part-time pension) were introduced in the 1980s. Early retirement schemes were targets...