This paper examines the impact of raising the pension eligibility age on retirement decisions. Using Japanese municipality tax records, we show that increasing the eligibility age for Earnings-Related Benefits (ERB) from 60 to 61 raised employment by 4–6 percentage points, with effects persisting beyond age 61 – a novel finding in this literature. We find no evidence that this employment persistence reflects attempts to offset pension income losses. Instead, it reflects behavioral responses combined with institutional features of the Japanese labor market, where workers generally re-sign contracts at age 60 and firms offer re-employment until 65, often under altered conditions. Heterogeneity by pre-60 income reveals distinct mechanisms. Lower earners typically stayed with their employers, accepting the re-employment contracts, while higher earners were more likely to remain employed in a lower earning jobs after age 60, suggesting experimentation from new employment arrangements. Overall, firm practices and labor market institutions jointly shape responses to pension reforms.

This paper examines the effects of Japan’s old-age pension earnings test on the labor supply of elderly men, who were eligible for pension between ages 61 and 63, and were subject to the earnings test until age 65. Using administrative residential tax records from 25 municipalities, we analyze how individuals adjusted earnings in response to the kink points created by the earnings test and how work incentives changed following its removal. We document clear bunching at the first kink point, indicating strong behavioral responses to the implicit tax on earnings. Notably, this bunching persisted even after the earnings test was lifted at age 65, suggesting frictions in post-retirement earnings adjustment. The response is weaker among younger cohorts—who were subject to the test for shorter durations—and stronger among individuals with lower pension benefits, who faced less binding constraints. Overall, our results show that the earnings test substantially distorted labor supply at the intensive margin, but these distortions attenuate when thresholds become more generous.

Using a mandatory retirement policy in China, which requires female workers to leave their current job at age 50, and the provincial unemployment rate at the time of retirement, we examine the labor market outcomes of young retirees over the business cycle. We find that the costs of retiring in a weak labor market are substantial. Women who reach the statutory retirement age during periods of above-median unemployment are 8 percentage points (or about 13 percent) less likely to work between the ages of 50 and 58. Women with higher net family assets are relatively more sensitive to high unemployment at the statutory retirement age. Although consumption does not fall significantly, affected women’s households reduce spending on other items such as transfers.