Live Longer, Work Longer? Evidence from Sweden’s Ageing Population
Abstract: Sweden’s elderly population is growing, propelled by a continuous decline in old-age mortality, while coupled with a persistent replacement level fertility. This changing age structure increases the per worker cost of providing a given age-vector of per capita benefits, encompassing costs for pensions, health care, and all other type of old-age welfare services, which presents a looming challenge for the welfare state to sustain its social transfer system. Options for tackling this daunting challenge, such as increasing fertility and immigration levels, cutting benefits and growing public debts, present numerous obstacles, thus discussion of policy options has shifted the focus towards extending working life. This book contributes to this ongoing policy discussion by exploring the recent trends in labor supply, and investigating the underlying mechanisms driving these trends. The results of this work illustrate a recent trend of prolonging working life in Sweden, whereby average labor income has increased at older ages, and younger cohorts have increasingly postponed their retirement. While these changes are uniform across individuals of different sexes, occupations, and educational levels, the underlying mechanisms appear different. These micro mechanisms may have myriad implications concerning aggregate economic support for the ageing Swedish population. In this regard, the findings in this book are relevant inputs for assessing the welfare consequences of population ageing and deriving evidence-based policy options.
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