Understanding the complexity of labour market transitions after age 65 in the Swedish policy context

Abstract As many governments seek to extend working lives, understanding the transitions that occur after traditional retirement age is important, especially where the transition to retirement is characterised by multiple options and pathways. Many such pathways feature sickness or disability, which constitutes a specific labour market option in Sweden with sickness absence (SA) benefits available after age 65. We used population-based register data in Sweden to examine labour market transitions over five years among people in paid work aged 65 in 2010-2014 (N = 179,415). Using Markov chain modelling, we studied transitions among six states, based on the balance of income from old-age pension, work, and SA benefits, with emigration and death as absorbing states. Separate analyses stratified by sex, employment status (employed vs self-employed), and occupational category (blue-collar vs white-collar), controlling for birth country, education, marital status, and urban/rural residence. 37% of the overall study population had some income from work at age 70. SA benefits, income from work only, and more income from work than old-age pension were the most volatile states where the transition probability to a variety of subsequent states was high. There was a lower transition probability out of old-age pension only or more income from old-age pension than work, and most transitions from one of these two states was to the other. While no differences in the overall patterns emerged by sex or occupational category, some were found by employment status, whereby self-employed people were more likely to transition to states with some income from work. The Swedish policy context supports flexible retirement and combining multiple sources of income. These findings highlight that many people take advantage of that, as shown by the complexity of late-career work trajectories. This research underscores the importance of multiple social dimensions when considering policy on extended working lives.