Increasing Statutory Retirement Age, Labor Market Outcomes, and Effect Heterogeneity: the 2017 Pension Reform in Finland

We study the 2017 pension reform in Finland, raising the statutory retirement age of the studied cohorts from 63 to 63 years and 6 months. Using monthly-based register data and a differences-in-differences approach, we estimate the reform’s impact on retirement, employment, unemployment, disability, sickness, and inactivity. Results indicate a significant 19-percentage-point increase in employment between the old and new retirement ages, alongside notable rises in unemployment, inactivity, and disability. Largely – but not entirely – this stems from the persistence of the previous labor market state. Gender differences are not large, but the effects vary considerably across education, income, employment sector, and self-employment status.