The effect of increasing the state pension age to 66 on labour market activity

We study the effect of an increase in the UK state pension age from 65 to 66, a high level internationally, on labour market activity. Despite there being limited financial incentives to retire at the state pension age, we find large effects: the employment rate of 65-year-olds increased by 7.4 percentage points for men and 8.5 percentage points for women due to the reform. The employment response is driven disproportionately by full-time workers and self-employed men, and is larger for those with lower levels of education and those living in the most deprived areas of the country.