Mårten Palme

Retirement and the role of financial incentives

In an NBER paper, Mårten Palme, joint with Per Johansson and Lisa Laun, have studied how economic incentives affect labor force exit through different income security programs, old-age pensions as well as income taxes in Sweden. The researchers used the option value for staying in the labor force as a measure of economic incentives and estimated an econometric model for the choice of leaving the labor market. Besides old-age pensions, they focused on disability insurance, the most important exit path before age 65. By simulating the effect of different probabilities to be granted disability insurance, they showed how changes in the stringency of disability insurance admittance affect labor supply among older workers through economic incentives.

Mårten Palme has done research on income inequality, earnings mobility, returns to education as well as the effect of income taxes and income security systems on labor market behavior. He has taught courses in statistical inference, sampling and survey methods, econometrics, economic demography and the economics of inequality. His publications include papers in the Journal of Public Economics, Economica, the Journal of Human Resources and Labour Economics.

Mårten Palme is Associate Professor at Stockholm University, previously at the Stockholm School of Economics. He received his primary degree from Stockholm University in 1988 and his PhD from Stockholm School of Economics in 1993. He is an IZA Research Fellow as well as an IFS International Research Associate.