Pension reform, incentives to retire and retirement behavior: empirical evidence from Swedish micro-data

Lisa Laun and Mårten Palme

No 2022:8, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This paper investigates to what extent the 1998 reform of Sweden’s public old-age pension system contributed to the increase in extensive margin labor supply among older workers seen in the country in recent decades. We use a large data set containing all males and females born in Sweden between 1927 and 1950 and observe their retirement behavior during 1991–2012. The data show that the reform changed the incentives to remain in the labor force ambiguously: although it induced an income effect towards later retirement through lower replacement levels,it also implied a lower price on leaving the labor market under some assumptions. We use an econometric model in which the economic incentives to stay in the labor market are measured by Social Security Wealth, defined at each hypothetical retirement age, and a variable measuring the implicit tax, imposed by the income security system, on staying in the labor force. The point estimates from our econometric model, which should be interpreted with caution, suggest that at most a small part of the increase in labor force participation of the elderly can be attributed to the pension reform.

Keywords: retirement; pension; reform; incentives to retire (search for similar items in EconPapers)
JEL-codes: H30 J10 J20 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-04-28
New Economics Papers: this item is included in nep-age, nep-eur, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.ifau.se/globalassets/pdf/se/2022/wp-20 ... edish-micro-data.pdf Full text (application/pdf)

Related works:
Chapter: Pension Reform, Incentives to Retire, and Retirement Behavior: Empirical Evidence from Swedish Microdata (2023)
Working Paper: Pension Reform, Incentives to Retire and Retirement Behavior: Empirical Evidence from Swedish Micro-data (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2022_008

Access Statistics for this paper

More papers in Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy IFAU, P O Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ali Ghooloo (ali.ghooloo@ifau.uu.se this e-mail address is bad, please contact repec@repec.org).