Pathways to Retirement and the Role of Financial Incentives in Sweden

43 Pages Posted: 19 May 2014

See all articles by Per Johansson

Per Johansson

IFAU - Institute for Labour Market Policy Evaluation; Uppsala University - Department of Economics; IZA Institute of Labor Economics

Lisa Laun

IFAU - Institute for Labour Market Policy Evaluation

Marten Palme

Stockholm University - Department of Economics; IZA Institute of Labor Economics

Date Written: May 2014

Abstract

We study how economic incentives affect labor force exit through different income security programs, old-age pensions as well as income taxes in Sweden. We use the option value for staying in the labor force as a measure of economic incentives and estimate an econometric model for the choice of leaving the labor market. Besides old-age pension, we focus on the Disability Insurance (DI), which is the most important exit path before age 65. By simulating the effect of different probabilities to be admitted DI we show how changes in the stringency of DI admittance affects labor supply among older workers through economic incentives.

Suggested Citation

Johansson, Per and Laun, Lisa and Palme, Marten, Pathways to Retirement and the Role of Financial Incentives in Sweden (May 2014). NBER Working Paper No. w20123, Available at SSRN: https://ssrn.com/abstract=2438544

Per Johansson (Contact Author)

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden
+ 46 18 471 70 86 (Phone)
+ 46 18 471 70 71 (Fax)

Uppsala University - Department of Economics ( email )

Uppsala, 751 20
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Lisa Laun

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden
+46 (0)18 471 60 56 (Phone)

Marten Palme

Stockholm University - Department of Economics ( email )

Universitetsv├Ągen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden
+46163307 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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