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Transition from Work to Retirement in EU25

Author

Listed:
  • Michael Fuchs
  • Mattia Makovec
  • Asghar Zaidi

Abstract

The policy agenda of extending working lives requires a holistic understanding of factors underlying the decision of older workers to withdraw from work and to retire. This brief paper presents employment patterns and trends of older people across EU Member States and identifies policy initiatives that would encourage more flexible and later retirement. The descriptive empirical evidence (from the EU Labour Force Survey) indicates that there are a broad range of experiences in EU countries with respect to the employment of older workers (those aged 50 and over). Strikingly, in the majority of EU15 countries, close to one-half of those of 50 and over are either unemployed or inactive, with reliance either on early retirement pensions or on social assistance benefits. The recent pension reforms in a number of these countries have increased the retirement age and this is likely to induce older workers to work longer. There is already some evidence that the effective retirement age is on the increase. Results suggest that the increase in older workers' employment is stronger for women than for men, and also for more highly educated. In most instances older workers either tend to be in full-time employment or inactive with very few occupying intermediate positions. Although there is some evidence of a gradual transition towards retirement, there is still a relatively minor proportion of the work force taking advantage of this, as well over 70% of men and around 55% of women in employment in their early 60s worked 35 hours a week or more. The policy aim should therefore be to encourage 'flexible and later retirement'. Additional incentives need to be provided so that people are not only able to move between jobs in later working life but also able to work part-time, without losing their entitlement to benefits (such as early retirement pensions). Such policy incentives will enable workers to avoid the phenomenon of a 'cliff-edge' fall into retirement that many of them often face.

Suggested Citation

  • Michael Fuchs & Mattia Makovec & Asghar Zaidi, 2006. "Transition from Work to Retirement in EU25," CASE Papers case112, Centre for Analysis of Social Exclusion, LSE.
  • Handle: RePEc:cep:sticas:case112
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    File URL: http://sticerd.lse.ac.uk/dps/case/cp/CASEpaper112.pdf
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    References listed on IDEAS

    as
    1. Kapteyn, Arie & Kalwij, Adriaan & Zaidi, Asghar, 2004. "The myth of worksharing," Labour Economics, Elsevier, vol. 11(3), pages 293-313, June.
    2. Giuseppe Carone, 2005. "Long-Term Labour Force Projections for the 25 EU Member States:A set of data for assessing the economic impact of ageing," Labor and Demography 0512006, EconWPA.
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    Cited by:

    1. Isilda Mara & Edlira Narazani, 2011. "Labour-incentive reforms at preretirement age in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(4), pages 481-510, November.

    More about this item

    Keywords

    Retirement; Retirement Policies; Labour Force and Employment; Size; and Structure;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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