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Labor supply after normal retirement age in Germany – A fourth pillar of retirement income?

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  • Martina Eschelbach

Abstract

Many European countries are currently transferring their pay-as-you-go public pension system to a three-pillar-system of public, occupational, and private pensions. In Germany, economists expect a pension gap for future retiree cohorts as public pensions will decrease and private old age provision is low. In this paper we ask, whether this pension gap might lead to the rise of a fourth pillar of retirement income: labor earnings. Using data from the German Socio-economic Panel, we find that retirees with low nonlabor income are more likely to work after normal retirement age. The negative relationship between nonlabor income and the participation probability is robust across educational and employment groups and particularly strong for retirees with low income. We conclude that labor market earnings constitute a pillar of retirement income already today.

Suggested Citation

  • Martina Eschelbach, 2011. "Labor supply after normal retirement age in Germany – A fourth pillar of retirement income?," Working Papers 106, Bavarian Graduate Program in Economics (BGPE).
    • Handle: RePEc:bav:wpaper:106_eschelbach
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    Cited by:

    1. Larsen, Mona & Pedersen, Peder J., 2017. "Labour force activity after 65: what explain recent trends in Denmark, Germany and Sweden?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 50(1), pages 15-27.

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    More about this item

    Keywords

    old age labor supply; work after normal retirement age; fourth pillar of retirement income;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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