The Unequal Burden of Retirement Reform : Evidence from Australia

As many governments raise eligibility ages for retirement benefits, there are concerns that such reforms disproportionately affect poorer households. In this paper, I examine the distributional effects of a 1994 Australian reform that increased women’s pension-eligibility age from 60 to 65. Using detailed longitudinal data, I find strong negative effects on household incomes for low-to-middle-income households but little impact on high-income households. The unequal impacts meant that, among affected households, the reform increased relative poverty rates by 33 to 39 percent and inequality measures by 12 to 15 percent. These results demonstrate that such reforms can be significantly regressive