The increase of the statutory retirement age to 67: how will it affect the labour participation in the Netherlands?

This paper examines the effects of the increase of the statutory retirement age from 65 to 67 on the old-age labour participation in the Netherlands with the use of a comparative and empirical analysis. The comparative analysis is based on case studies of 15 OECD countries. The case studies investigate the pensions systems and demography in the countries and find that the statutory retirement age and life expectancy weakly affect the old-age labour participation in the age group 55-64, whereas the early and late accrual rate have a larger effect. The empirical analysis extrapolates the labour participation to find the labour participation in the age group 65-69. Two models are designed to examine the effect. The first is based on the statutory retirement age only, whereas the second controls for the effective retirement age, pension replacement rate, early and late accrual rate, and life expectancy. It is found that the statutory retirement age only affect the labour participation in the age groups 55-64 and 65-69 when not controlled for other variables. The addition of the control variables finds that the effective retirement age and late accrual rate significantly affect the old-age labour participation rate. It is concluded that the increase of the statutory retirement age from 65 to 67 is only effective in the Netherlands when it is simultaneously increased with the late accrual rate.