Arbeitspapier

The effect of age-targeted tax credits on retirement behavior

This paper analyzes the effect of two age-targeted policy initiatives to delay retirement that were simultaneously implemented in Sweden in 2007: an earned income tax credit and a payroll tax credit. Both policies were targeted at workers aged 65 or above at the beginning of the tax year. The paper exploits that the special rules for elderly were governed by the year of birth while the social security system is governed by age at retirement, i.e., the day of birth, in analyzing the effect of the new policies. The results suggest that the age-targeted tax credits increased employment in the year following the 65th birthday by 1.5 percentage points among individuals with annual earnings above the 2007 tax liability threshold three to five years earlier. An analysis of fiscal implications indicates, however, that the increase in employment was not large enough to offset the implied decrease in tax revenues.

Language
Englisch

Bibliographic citation
Series: Working Paper ; No. 2012:18

Classification
Wirtschaft
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
Demographic Economics: Public Policy
Labor Force and Employment, Size, and Structure
Subject
Labor supply
retirement
earned income tax credit
payroll taxes
Altersgrenze
Steuervergünstigung
Arbeitsangebot
Wirkungsanalyse
Schweden

Event
Geistige Schöpfung
(who)
Laun, Lisa
Event
Veröffentlichung
(who)
Institute for Evaluation of Labour Market and Education Policy (IFAU)
(where)
Uppsala
(when)
2012

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Laun, Lisa
  • Institute for Evaluation of Labour Market and Education Policy (IFAU)

Time of origin

  • 2012

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