The rise of working pensioners: the Swedish case.

This paper describes and analyzes the impact of taxes on the choices people make about working and collection of pension benefits. One rationale for the paper is the recent sharp increase in the number of employed older workers in Sweden. The paper emphasizes the increase of older workers who have both labor and pension income. A main aim of this paper is to explain how much financial incentives have had to do with this change. The evaluation proceeds from both natural experiments and structural models. One evaluation is based on the effect of targeted tax reductions for older workers implemented in 2007, but an evaluation is also made of an expanded reform in which eligibility for the increased in-work tax credit (Jobbskatteavdrag, “JSA”) begins at age 61. The evaluation focuses on the effects on employment and public finances, which includes both short-term and long-term assessments. The paper concludes with a summary and a few reflections on future tax policy.