Late careers and career exits in Norway 1

Early retirement affects the age structure of the work force, reduces the supply of labor and contributes significantly to financial pressure on the welfare state. In a pay-as-you-go social security system, which is the most common form in Western countries, large-scale early retirement exacerbates the already large crisis in how benefits for the retired are to be financed in steadily aging populations (Van Dalen 1996; Börsch-Supan 2000). Even though Norway has substantial petroleum revenues and possesses extensive financial assets, mostly accumulated in the Government Petroleum Fund, the country faces economic challenges arising from demographic shifts (NOU 2004: 1). The average retirement age is falling, while the proportion of elderly people is rising, a trend that will continue in the next few decades. By 2050, almost 25 percent of the population is projected to be age 65 and over; it currently stands at 14 percent (OECD 2004).