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Title:A life cycle model of health and retirement: The case of Swedish pension reform PDF Logo
Authors:Laun, Tobias
Wallenius, Johanna
Issue Date:2012
Series/Report no.:SSE/EFI Working Paper Series in Economics and Finance 741
Abstract:In this paper we develop a life cycle model of labor supply and retirement to study the interactions between health and the labor supply behavior of older workers, in particular disability insurance and pension claiming. In our framework, individuals choose when to stop working and, given eligibility criteria, when/if to apply for disability and pension benefits. Individuals care about their health and can partially insure against health shocks by investing in health. We use the model to study the labor supply implications of the recent Swedish pension reform. We find that the new pension system creates big incentives for the continued employment of older workers. In particular, the model predicts an increase in the average retirement age of more than two years.
Subjects:life cycle
retirement
pension reform
disability insurance
health
JEL:E24
J22
J26
Document Type:Working Paper
Appears in Collections:SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics

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