Labor Supply and Savings Responses to Increasing the Pension Eligibility Age in South Korea

By Janghyeok An, Devon Gorry & Jonathan M. Leganza

We study how South Koreans responded to an increase in the full pension eligibility age. Using a regression discontinuity design, we document the causal effects of the change on several potential margins of adjustment. We find clear evidence of delayed benefit claiming, consistent with studies in other settings. However, we find little to no statistical evidence of changes in labor supply, in contrast with previous literature. We also find no changes in savings or spending. These muted responses may be, in part, because the South Korean pension is relatively new and benefit replacement rates are comparatively modest.

Source SSRN