Work in progress
Partial Retirement and Labor Supply: Quasi-experimental Evidence from Sweden
Revise and Resubmit at Canadian Journal of Economics
The declining share of the working-age population (20-64) has led many countries to introduce social security reforms to extend the working lives of older employees. While reforms such as raising the early retirement age can effectively achieve this goal, they are often perceived as forced. Partial retirement schemes, which allow individuals to work part-time while receiving a significant portion of their previous wages, offer a more flexible alternative. However, the impact of these schemes on overall labor supply remains ambiguous. On one hand, partial retirement may increase labor supply by encouraging part-time work over early retirement; on the other, it may reduce labor supply if full-time workers choose to shift to part-time work. This paper investigates these effects by studying the introduction of a partial retirement scheme for central government employees aged 61-65 in Sweden. The findings show a 6.5% drop in average earnings, suggesting that generous partial retirement terms, which replace a substantial share of prior income, incentivize a shift from full-time to part-time work, thereby reducing the overall labor supply.
Parental Retirement and Children's Labor Supply: Evidence from a Regression Discontinuity Design
This paper investigates the impact of parental retirement on the labor supply of adult children using a fuzzy regression discontinuity (RDD) design, leveraging the normal retirement age in Sweden as a distinct cutoff. By analyzing comprehensive administrative individual-level monthly data, the results indicate no statistically significant effect of parental retirement on adult children's labor supply. The findings suggest that neither the reduction in parents' financial capacity due to retirement nor the potential increase in time transfers, by providing grandchild care, plays a role in influencing adult children's labor supply in the short term. This outcome aligns with Sweden's context, characterized by extensive and generous formal childcare programs that likely mitigate reliance on informal care from grandparents.
Labor market effects of increasing the early claiming age in a flexible pension system (with Oystein Herneas, Johannes Hagen, and Stefanie König)
Under review
We study a reform that raised the earliest eligibility age for public pensions from 61 to 62. Using rich Swedish administrative data and a difference-in-differences design that compares adjacent age groups differentially affected by the new threshold, we assess the reform’s effects on pension claiming, labor supply, social insurance benefit receipt, and disposable income. Prior to the reform, around 10% of individuals claimed their public pension at age 61. The reform mechanically reduced this share to zero, but also induced delayed claiming beyond the new threshold, including postponed occupational and private pension claims. Employment increased by up to 1.3 percentage points, and sickness and unemployment benefit receipt rose by 0.6–0.9 and 0.1–0.2 percentage points, respectively. These responses were concentrated among low-income individuals who were already working. For this group, increased work offset the delayed pension access and left disposable income largely unchanged. In contrast, non-working low-income individuals and the self-employed experienced a substantial short-term decline in disposable income, ranging from 7 to 10%. Our findings point to liquidity constraints and behavioral responses as key mechanisms in eligibility age reforms within a flexible, actuarially neutral pension system where work and pension claiming are decoupled. Overall, the reform had a modest yet positive net fiscal impact.