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Income Security Programs and Retirement in Sweden

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  • Palme, Mårten

    () (Dept. of Economic Statistics, Stockholm School of Economics)

  • Svensson, Ingemar

    () (National Social Insurance Board)

Abstract

We examine the effects of economic incentives inherent in pension schemes and income security programs on retirement behavior in the Swedish labor market. We use social security wealth and three alternative measures of accrual (one-year benefit accrual, peak value and option value). The social security system, occupational pensions as well as insurance on the labor market, i.e., unemployment, sickness and disability insurance are considered. We estimate a model using panel data on about 30 000 men and women born between 1927 and 1940, observed between 1983 and 1997. The model is then used to simulate the effects of two alternative systems: one where eligibility for benefits in the prevailing system is delayed by three years and another where replacement levels are reduced.

Suggested Citation

  • Palme, Mårten & Svensson, Ingemar, 2001. "Income Security Programs and Retirement in Sweden," SSE/EFI Working Paper Series in Economics and Finance 422, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0422
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    References listed on IDEAS

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    1. 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.
    2. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    3. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, March.
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    Cited by:

    1. Kolsrud, Jonas & Landais, Camille & Spinnewijn, Johannes, 2017. "Studying Consumption Patterns using Registry Data: Lessons From Swedish Administrative Data," CEPR Discussion Papers 12402, C.E.P.R. Discussion Papers.
    2. Thomas Aronsson & James R. Walker, 2010. "Labor Supply, Tax Base and Public Policy in Sweden," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 127-158, National Bureau of Economic Research, Inc.
    3. Roman Raab, 2011. "Financial incentives in the Austrian PAYG-pension system: micro-estimation," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(2), pages 231-257, May.
    4. Courtney C. Coile & Phillip B. Levine, 2007. "Labor Market Shocks and Retirement: Do Government Programs Matter?," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1902-1919, National Bureau of Economic Research, Inc.
    5. Eklöf, Matias & Hallberg, Daniel, 2004. "Private Alternatives and Early Retirement Programs," Working Paper Series 2004:5, Uppsala University, Department of Economics.
    6. Mona Larsen & Peder J. Pedersen, 2008. "Pathways to early retirement in Denmark, 1984-2000," International Journal of Manpower, Emerald Group Publishing, vol. 29(5), pages 384-409, August.
    7. Mårten Palme & Ingemar Svensson, 2010. "Incentives to Retire, the Employment of the Old, and the Employment of the Young in Sweden," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 295-318, National Bureau of Economic Research, Inc.
    8. Linda Kridahl, 2017. "Retirement timing and grandparenthood: A population-based study on Sweden," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 37(31), pages 957-994.
    9. Meghir, Costas & Palme, Mårten & Simeonova, Emilia, 2012. "Education, Health and Mortality: Evidence from a Social Experiment," Research Papers in Economics 2012:4, Stockholm University, Department of Economics.
    10. Selin, Håkan, 2011. "What happens to the husband’s retirement decision when the wife’s retirement incentives change?," Working Paper Series, Center for Fiscal Studies 2011:8, Uppsala University, Department of Economics.
    11. Daniel Hallberg & Matias Eklöf, 2010. "Do buy-outs of older workers matter?: Estimating retirement behavior with special early retirement offers," International Journal of Manpower, Emerald Group Publishing, vol. 31(3), pages 337-359, June.
    12. Anders Karlström & Mårten Palme & Ingemar Svensson, 2011. "Assessing the welfare change from a pension reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(6), pages 634-657, December.
    13. Asch, Beth & Haider, Steven J. & Zissimopoulos, Julie, 2005. "Financial incentives and retirement: evidence from federal civil service workers," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 427-440, February.
    14. Tibor Hanappi, 2012. "Retirement Behaviour in Austria: Incentive Effects on Old-Age Labor Supply," NRN working papers 2012-13, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    15. Håkan Selin, 2017. "What happens to the husband’s retirement decision when the wife’s retirement incentives change?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 432-458, June.
    16. Hallberg, Daniel, 2003. "A Description of Routes out of the Labor Force for Workers in Sweden," Working Paper Series 2003:23, Uppsala University, Department of Economics.
    17. Karlström, Anders & Palme, Mårten & Svensson, Ingemar, 2008. "The employment effect of stricter rules for eligibility for DI: Evidence from a natural experiment in Sweden," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2071-2082, October.
    18. Anders Karlstrom & Marten Palme & Ingemar Svensson, 2004. "A dynamic programming approach to model the retirement behaviour of blue-collar workers in Sweden," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 795-807.

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    More about this item

    Keywords

    benefit accrual; peak value; option value; disability insurance;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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