EUROPEAN PAPERS ON THE NEW WELFARE

Part-Time Pensions and Part-Time Work in Sweden

7. An estimation of the effects of the part-time pension system on the number of hours worked
It is difficult to estimate the effects of the part-time pension system on the number of hours worked. It is necessary to ascertain what the part-time pensioners would have done had they not had the part-time pension option, and we also need information on the number of hours worked before and after taking a part-time pension. I will attempt to make an estimation of the total effects but must underline that the calculations are based on data which is not perfect for the task. Figures have been used on the number of hours worked before and after receiving a part-time pension which the National Insurance Board has calculated in connection with an earlier study of the part-time pension scheme, and also estimations from Sundén (1994) on what the part-time pensioners would have done had they not had the option of a part-time pension.
First we will look at the number of hours worked before and after taking up a part-time pension. Values for the years 1991 and 1994 are shown in Table 915. The people worked on average slightly less than 40 hours a week before taking up a part-time pension — women somewhat fewer hours than men. According to the data from the National Insurance Board, a not insignificant number of people were working more than 40 hours before taking a part-time pension, in some cases many hours more. As it is not clear how these high numbers of working hours should be interpreted, the calculation has been made using the figures received and by assuming that those with a work-week of more than 40 hours worked 40 hours. As seen in the table, the differences between the results given by the two methods are not large.
After taking a part-time pension people worked on average 24-25 hours — women somewhat more hours than men. Therefore, the reduction in working hours is less for women than for men (women work fewer hours before taking a part-time pension and more hours afterwards). The next step, also shown in the table, is to calculate the maximum share of those who could have continued to work as much as before if they had not taken a pension, without leading to a reduction in the total number of hours worked. We see that this share is slightly more than 60% for men and around 65% for women. (The share would have been 50% if part-time pensioning on average had meant a change from full-time to half-time work, but that is not the case according to the information available). If the share of those who otherwise would have continued to work as much as before is higher than those percentages, the total number of hours worked will decline; conversely, if the shares are lower, the total number of hours will increase.

Table 9: Average number of working hours before and after being granted a part-time pension, and the share of the part-time pensioners who at most may have chosen part-time pension instead of continuing to work the same number of hours as before the pension if the total number of working hours did not decline
wande-tabella9_eng.gif

It is possible to illustrate the method with an example. Assume that before taking up a part-time pension everyone works 39 hours a week and they all work 24 hours after pensioning. This means that the person who works part-time instead of ‘full-time’ as a result of the offer of a part-time pension diminishes his labour supply by 15 hours (39 minus 24), and that the person who — without the option of a part-time pension — would have left the labour market, increases his labour supply by 24 hours (24 minus 0). In this example which is close to the information we have, the second effect is larger than the first one per person. It means that less than a 50% change from leaving the labour force to working part-time is needed to get a net addition to the labour supply.

15 I have also had access to the corresponding information from 1992 and 1993 but as the variations are small between the years I have chosen to only present the results for two of the four years).


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