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Income mobility in old age in Britain and Germany

  • Asghar Zaidi
  • Joachim R. Frick
  • Felix Buchel

The increases in human longevity in recent decades and the trends for early retirement have posed new challenges for policy makers, and require a holistic understanding of the processes that influence the economic resources of older people. This paper contributes to this knowledge by examining the income mobility experienced by older people living in Britain and Germany during the 1990s, and by identifying personal attributes and life-course events that influenced its direction and likelihood. The analysis uses the British Household Panel Survey (BHPS) and the German Socio-Economic Panel (SOEP) panel data. The comparative perspective yields insights about the different income experience of older people in the two markedly different welfare regimes. Results show that old-age income mobility is more pronounced in Britain than in Germany, and that in both countries its occurrence is particularly associated with changes in living arrangements, in the employment status of the co-resident family members and with widowhood among women. Unemployment during working life is also associated with significant negative later life income mobility. Among those on low incomes, a high share of income from an earnings-related pension had a significant and positive effect in both countries. One policy implication is the need to strengthen the social safety net, to safeguard against downward income mobility in old age, particularly among widows. Policy incentives are required to encourage flexible living arrangements in old age, as well as a greater protection from unemployment during working life, more so in Germany than in Britain.

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File URL: http://eprints.lse.ac.uk/6300/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 6300.

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Length: 28 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:ehl:lserod:6300
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  1. Jarvis, Sarah & Jenkins, Stephen P, 1998. "How Much Income Mobility Is There in Britain?," Economic Journal, Royal Economic Society, vol. 108(447), pages 428-43, March.
  2. Börsch-Supan, Axel & Schnabel, Reinhold, 1997. "Social security and retirement in germany," Sonderforschungsbereich 504 Publications 97-20, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  3. David A. Wise, 1989. "The Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise89-1, September.
  4. Winfried Schmähl, 1998. "Recent Developments of Pension Schemes in Germany: Present and Future Tasks in Conflict," LABOUR, CEIS, vol. 12(1), pages 143-168, 03.
  5. Bliss, Christopher, 1999. "Galton's Fallacy and Economic Convergence," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 4-14, January.
  6. Fields, Gary S & Ok, Efe A, 1999. "Measuring Movement of Incomes," Economica, London School of Economics and Political Science, vol. 66(264), pages 455-71, November.
  7. Tsakloglou, Panos, 1996. "Elderly and Non-elderly in the European Union: A Comparison of Living Standards," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(3), pages 271-91, September.
  8. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
  9. Fields, Gary S. & Ok, Efe A., 1996. "The Meaning and Measurement of Income Mobility," Journal of Economic Theory, Elsevier, vol. 71(2), pages 349-377, November.
  10. Richard Blundell & Paul Johnson, 1999. "Pensions and Retirement in the United Kingdom," NBER Chapters, in: Social Security and Retirement around the World, pages 403-435 National Bureau of Economic Research, Inc.
  11. Karen Holden & Richard Burkhauser & Daniel Feaster, 1988. "The timing of falls into poverty after retirement and widowhood," Demography, Springer, vol. 25(3), pages 405-414, August.
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