Abstract:

While many commentators raise concerns about the fairness of increases in pension-access ages – a frequent policy response to population ageing – there is scant empirical evidence assessing the validity of these concerns. I contribute new evidence by examining the distributional effects of an Australian reform in 1994 that progressively increased women’s pension age from 60 to 65. Using detailed longitudinal data from 2001 to 2015, I find that women responded by remaining on other transfer programs and delaying retirement, but there was considerable heterogeneity in the effects. Consistent with theory, most of the claiming and labour supply responses were explained by single, financially constrained women, and the reform significantly reduced household incomes below the median. My estimates indicate that, among affected households, the reform increased both relative poverty, by 26–33%, and inequality, by 11–36%, demonstrating that increases in pension-access ages can have meaningful regressive effects.