Survivors' Pension Rights in Occupational and Social Insurance: The Swedish Experience

Abstract

Since the early 1990s, there has been no widow's pension in Swedish social insurance. This is consistent with the aim of implementing an individual model, in pursuit of the goal of economic independence for all adults. However, both a widow's and a widower's pension are included in occupational insurance schemes. In Sweden, these are based on collective labour market agreements and cover almost all employees. The survivors' pension can be seen as an annual non-wage benefit. As such, it should be taken into account when remuneration from work between different socio-economic groups is compared. However, we cannot directly observe the individual value of mandatory collective insurance. This article is an original attempt to determine the individual value of certain occupational and social insurance rights. A money value for earnings-related survivors' pension rights is estimated and added to the money wage to create an extended wage measure. We use Swedish microdata to analyze what the inclusion of different insurance rights might mean for wage differentials and wage dispersion. The study indicates that wage inequality is understated when non-wage benefits in the form of survivors' pension rights are excluded from the compensation measure and that a more complete picture of wage differentials is obtained when these rights are accounted for. If we were able to consider differences in survivors' pension rights between countries, this would be a step towards more complete wage comparisons between the different EU-countries.