The effect of age-targeted tax credits on retirement behavior
AbstractThis paper analyzes the effect of two age-targeted policy initiatives to delay retirement that were simultaneously implemented in Sweden in 2007: an earned income tax credit and a payroll tax credit. Both policies were targeted at workers aged 65 or above at the beginning of the tax year. The paper exploits that the special rules for elderly were governed by the year of birth while the social security system is governed by age retirement,i.e., the day of birth, in analyzing the effect of the new policies. The results suggest that the age-targeted tax credits increased employment in the year following the 65th birthday by 1.5 percentage points among individuals with annual earnings above the 2007 tax liability threshold three to five years earlier. An analysis of fiscal implications indicates, however, that the increase in employment was not large enough to offset the implied decrease in tax revenues.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2012:18.
Length: 53 pages
Date of creation: 15 Oct 2012
Date of revision:
Labor supply; retirement; earned income tax credit; payroll taxes;
Other versions of this item:
- Laun, Lisa, 2012. "The E ffect of Age-Targeted Tax Credits on Retirement Behavior," Research Papers in Economics 2012:14, Stockholm University, Department of Economics.
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-11-11 (Accounting & Auditing)
- NEP-AGE-2012-11-11 (Economics of Ageing)
- NEP-ALL-2012-11-11 (All new papers)
- NEP-LAB-2012-11-11 (Labour Economics)
- NEP-LMA-2012-11-11 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Ericson & Lennart Flood, 2012.
"A Microsimulation Approach to an Optimal Swedish Income Tax,"
International Journal of Microsimulation,
Interational Microsimulation Association, vol. 2(5), pages 2-21.
- Ericson, Peter & Flood, Lennart, 2009. "A Microsimulation Approach to an Optimal Swedish Income Tax," IZA Discussion Papers 4379, Institute for the Study of Labor (IZA).
- Ericson, Peter & Flood, Lennart, 2009. "A Microsimulation Approach to an Optimal Swedish Income Tax," Working Papers in Economics 375, University of Gothenburg, Department of Economics.
- Falkinger, Josef & Winter-Ebmer, Rudolf & Zweimüller, Josef, 1994.
"Retirement of Spouses and Social Security Reform,"
CEPR Discussion Papers
855, C.E.P.R. Discussion Papers.
- Aaberge, Rolf & Flood, Lennart, 2008.
"Evaluation of an In-work Tax Credit Reform in Sweden: Effects on Labor Supply and Welfare Participation of Single Mothers,"
Working Papers in Economics
319, University of Gothenburg, Department of Economics.
- Aaberge, Rolf & Flood, Lennart, 2008. "Evaluation of an In-Work Tax Credit Reform in Sweden: Effects on Labor Supply and Welfare Participation of Single Mothers," IZA Discussion Papers 3736, Institute for the Study of Labor (IZA).
- Mårten Palme & Ingemar Svensson, 2007. "Financial Implications of Income Security Reforms in Sweden," NBER Chapters, in: Social Security Programs and Retirement around the World: Fiscal Implications of Reform, pages 413-458 National Bureau of Economic Research, Inc.
- Jukka Pirttilä & Hakan Selin, 2011.
"Tax Policy and Employment: How Does the Swedish System Fare?,"
CESifo Working Paper Series
3355, CESifo Group Munich.
- Pirttälä, Jukka & Selin, Håkan, 2011. "Tax Policy and Employment: How Does the Swedish System Fare?," Working Paper Series, Center for Fiscal Studies 2011:2, Uppsala University, Department of Economics.
- Helena Holmlund, 2008.
"A Researchers Guide to the Swedish Compulsory School Reform,"
CEE Discussion Papers
0087, Centre for the Economics of Education, LSE.
- Holmlund, Helena, 2007. "A Researcher's Guide to the Swedish Compulsory School Reform," Working Paper Series 9/2007, Swedish Institute for Social Research.
- Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, December.
- Lehmann, Etienne & Marical, François & Rioux, Laurence, 2011. "Labor Earnings Respond Differently to Income-Tax and to Payroll-Tax Reforms," IZA Discussion Papers 6108, Institute for the Study of Labor (IZA).
- Tammy Schirle, 2008.
"Why Have the Labor Force Participation Rates of Older Men Increased since the Mid-1990s?,"
Journal of Labor Economics,
University of Chicago Press, vol. 26(4), pages 549-594, October.
- T. Schirle, 2007. "Why Have the Labour Force Participation Rates of Older Men Increased Since the Mid 1990s," Working Papers eg0045, Wilfrid Laurier University, Department of Economics, revised 2007.
- Edmark, Karin & Liang, Che-Yuan & Mörk, Eva & Selin, Håkan, 2012. "An Evaluation of the Swedish Earned Income Tax Credit," Working Paper Series 901, Research Institute of Industrial Economics.
- Jonathan Gruber & David A. Wise, 1999. "Introduction to "Social Security and Retirement around the World"," NBER Chapters, in: Social Security and Retirement around the World, pages 1-35 National Bureau of Economic Research, Inc.
- Stéphanie Jamet & Thomas Chalaux & Vincent Koen, 2013. "Labour Market and Social Policies to Foster More Inclusive Growth in Sweden," OECD Economics Department Working Papers 1023, OECD Publishing.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margareta Wicklander).
If references are entirely missing, you can add them using this form.