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Social Security, Occupational Pensions, and Retirement in Sweden

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  • Marten Palme
  • Ingemar Svensson

Abstract

This paper provides an overview of the Swedish social security system and its impact on individual retirement behavior. First, we give some historical facts, as well as a more detailed description of the current situation, of labor market behavior of older persons. Second, we describe the social security system. We also describe the different occupational pension schemes, which have an increasing importance. Finally, we show the results from a simulation, where we have used the earnings path of several representative workers to calculate the implicit tax (or subsidy) rate on additional work after age 55 generated by the social security system in interaction with occupational pensions and income taxes as well as housing allowances. We find that the observed labor market behavior of older men is in accordance with the economic incentives generated by the social security system and in particular with the occupational pension scheme for blue collar workers.

Suggested Citation

  • Marten Palme & Ingemar Svensson, 1997. "Social Security, Occupational Pensions, and Retirement in Sweden," NBER Working Papers 6137, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6137 Note: AG PE
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    References listed on IDEAS

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    1. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters,in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
    2. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, January.
    3. Thomas Aronsson & James R. Walker, 1997. "The Effects of Sweden's Welfare State on Labor Supply Incentives," NBER Chapters,in: The Welfare State in Transition: Reforming the Swedish Model, pages 203-266 National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Eklöf, Matias & Hallberg, Daniel, 2004. "Private Alternatives and Early Retirement Programs," Working Paper Series 2004:5, Uppsala University, Department of Economics.
    2. Casey B Mulligan, 1999. "Gerontocracy, Retirement, and Social Security," University of Chicago - George G. Stigler Center for Study of Economy and State 154, Chicago - Center for Study of Economy and State.
    3. Disney, Richard & Whitehouse, Edward, 1999. "Pension plans and retirement incentives," Social Protection and Labor Policy and Technical Notes 20851, The World Bank.
    4. repec:dem:demres:v:37:y:2017:i:31 is not listed on IDEAS
    5. Daniela Andrén, 2008. "First Exits from the Swedish Labor Market Due to Disability," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), pages 227-238.
    6. Casey B. Mulligan & Xavier Sala-i-Martin, 2003. "Social Security, Retirement, and the Single-Mindedness of the Electorate," NBER Working Papers 9691, National Bureau of Economic Research, Inc.
    7. Kruse, Agneta & Nyberg, Kristian, 2004. "Pensions and external effects of ageing; effects on distribution," Working Papers 2004:27, Lund University, Department of Economics.
    8. Weller, Christian E., 2001. "Programs without alternative: Public pensions in the OECD," ZEI Working Papers B 15-2001, University of Bonn, ZEI - Center for European Integration Studies.
    9. 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.
    10. Broström, Göran & Palme, Mårten & Johansson, Per, 2002. "Economic incentives and gender differences in work absence behavior," Working Paper Series 2002:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    11. Horneff, Vanya & Kaschützke, Barbara & Maurer, Raimond & Rogalla, Ralph, 2014. "Welfare implications of product choice regulation during the payout phase of funded pensions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(03), pages 272-296, July.
    12. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Social security in theory and practice (I): Facts and political theories," Economics Working Papers 384, Department of Economics and Business, Universitat Pompeu Fabra.
    13. Hakola, Tuulia, 2002. "Alternative Approaches to Model Withdrawals from the Labour Market – A Literature Review," Working Paper Series 2003:4, Uppsala University, Department of Economics.
    14. 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.
    15. Axel Borsch-Supan, 1998. "Incentive Effects of Social Security on Labor Force Participation: Evidence in Germany and Across Europe," NBER Working Papers 6780, National Bureau of Economic Research, Inc.
    16. Miles, David K, 2000. "Funded and Unfunded Pensions: Risk, Return and Welfare," CEPR Discussion Papers 2369, C.E.P.R. Discussion Papers.
    17. Johansson, Per & Palme, Mårten, 2004. "Moral hazard and sickness insurance: Empirical evidence from a sickness insurance reform in Sweden," Working Paper Series 2004:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    18. Borsch-Supan, Axel, 2000. "Incentive effects of social security on labor force participation: evidence in Germany and across Europe," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 25-49, October.
    19. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
    20. 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, pages 2071-2082.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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