Ottmer Henning: Essays on Retirement Ages and Immigrants' Access to Basic Social Insurance

Abstract

Essay I: This paper examines a 1976 Swedish reform that lowered the normal retirement age (NRA) for public pensions from 67 to 65. The reform implied substantial increases in future pension benefits while leaving contribution rules unchanged. Using administrative data, I find sharp behavioral responses: employment at age 66 fell by 17 percentage points, or 47 percent relative to pre-reform levels, with little effect above the new NRA and modest effects below it. Exploiting variation across occupational pension schemes and reform timing, I use a set of back-of-the-envelope calculations to assess the relative importance of different mechanisms. The patterns are most consistent with behavioral responses and social norms playing a central role, while wealth effects appear to explain roughly one-fifth of the decline. I also provide suggestive evidence on employer-side factors, including automatic termination rules. The reform targeted an older age group than is typical in the literature on retirement ages, at a time when health and work capacity were more limited than today, making the findings relevant for contemporary policy settings in which increases in statutory retirement ages extend to older ages.

Essay II (with Axel Cronert and Lisa Laun):  We study the causal effects of lowering immigrants' public old-age pension entitlements, exploiting a 1993 Swedish reform that introduced residence-based pro-rating of basic pension benefits. Using difference-in-differences designs that compare cohorts and groups differentially exposed to the new rule and its exemptions, we show that affected immigrants receive substantially lower taxable retirement income than they would have under the old rules, only partly offset by increased receipt of means-tested transfers. We find no evidence of compensatory responses among affected individuals in labor supply nor private savings, and no significant spousal labor-supply responses. Instead, adjustment appears among adult children, whose employment and earnings increase compared to children of exempt immigrants,  while their natality declines. Despite sizable income losses, we find little evidence of adverse effects on mortality, inpatient care, or long-run health-care utilization. Short-run reductions in some outpatient and prescription-drug measures suggest changes in health-care use. Our findings show that old-age pension eligibility rules shape not only immigrants' retirement income, but also the distribution of economic pressure and responsibilities across generations within families.

Essay III (with Axel Cronert and Lisa Laun): Migrants' access to social protection is often restricted by eligibility rules linked to citizenship, residence, or contribution histories. This paper studies the causal effects of expanding access to disability insurance (DI) among immigrants, exploiting variation in eligibility generated by international social security agreements and naturalization rules in Sweden prior to a universal reform in 1979. Using administrative panel data and a staggered difference-in-differences design, we estimate the dynamic effects of gaining eligibility for the basic component of DI between 1969 and 1978. We find that eligibility substantially increases DI participation. Participation rises by 2.9 percentage points in the year of eligibility and by 6.6 percentage points after three years, with particularly large effects among older immigrants and those with weak prior labor-market attachment. Increased participation is accompanied by a decline in employment of around 1.5 percentage points in the eligibility year and persistent reductions in labor earnings. Despite these labor-market effects, disposable income declines only modestly, and hardly at all for women and those with weak prior labor-market attachment. We find little evidence of effects on partner labor supply or hospitalization. These findings highlight eligibility as an important policy margin shaping program participation and labor-market outcomes, and show how international social security coordination and citizenship-based access rules can influence the distribution of social protection within welfare states.