IDEAS home Printed from https://ideas.repec.org/p/erp/leqsxx/p0058.html
   My bibliography  Save this paper

Employment Duration and Shifts into Retirement in the EU

Author

Listed:
  • Ted Aranki & Corrado Macchiarelli

Abstract

The decision to cease working is traditionally influenced by a wide set of socio-economic and environmental variables. In this paper, we study transitions out of work for 26 EU countries over the period 2004-2009 in order to investigate the determinants of retirement based on the Eurostat Survey on Income and Living Conditions (EU-SILC). Applying standard survivor analysis tools to describe exits into retirement, we do not find any significant differences in the patterns into retirement between the average euro area and EU non-euro area countries. Moreover, we find that shifts into retirement have increased during the onset of the 2009 economic and financial crisis. Income, together with flexible working arrangements, is found to be important as regards early retirement decisions, compared to retiring beyond the legal retirement age. Finally, we show that institutional measures (such as, state/health benefits, minimum retirement age) could not be sufficient alone if individuals withdraw earlier from the labour market due to a weakening of their health. Especially, these latter results are of importance for structural and macroeconomic policy, for instance, in increasing the employment of both people and hours worked against the background of population ageing.

Suggested Citation

  • Ted Aranki & Corrado Macchiarelli, 2013. "Employment Duration and Shifts into Retirement in the EU," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 8, London School of Economics / European Institute.
  • Handle: RePEc:erp:leqsxx:p0058
    as

    Download full text from publisher

    File URL: http://www.lse.ac.uk/europeanInstitute/LEQS/LEQSPaper58.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Boskin, Michael J. & Hurd, Michael D., 1978. "The effect of social security on early retirement," Journal of Public Economics, Elsevier, vol. 10(3), pages 361-377, December.
    2. David Autor & David Dorn, 2009. "This Job Is "Getting Old": Measuring Changes in Job Opportunities Using Occupational Age Structure," American Economic Review, American Economic Association, vol. 99(2), pages 45-51, May.
    3. Meghir, Costas & Whitehouse, Edward, 1997. "Labour market transitions and retirement of men in the UK," Journal of Econometrics, Elsevier, vol. 79(2), pages 327-354, August.
    4. C Machado & Miguel Portela, 2014. "Hours of work and retirement behaviour," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.
    5. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    6. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
    7. Blake, David, 2002. "The impact of wealth on consumption and retirement behaviour in the UK," LSE Research Online Documents on Economics 24949, London School of Economics and Political Science, LSE Library.
    8. Ronald Hagan & Andrew M. Jones & Nigel Rice, 2009. "Health and Retirement in Europe," IJERPH, MDPI, vol. 6(10), pages 1-20, October.
    9. Hanoch, Giora & Honig, Marjorie, 1983. "Retirement, Wages, and Labor Supply of the Elderly," Journal of Labor Economics, University of Chicago Press, vol. 1(2), pages 131-151, April.
    10. Stephen Wu, 2003. "The Effects of Health Events on the Economic Status of Married Couples," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    11. Marcel Kerkhofs & Maarten Lindeboom, 1995. "Subjective health measures and state dependent reporting errors," Health Economics, John Wiley & Sons, Ltd., vol. 4(3), pages 221-235, May.
    12. Brent Kreider, 1999. "Latent Work Disability and Reporting Bias," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 734-769.
    13. Andrew M. Jones (ed.), 2006. "The Elgar Companion to Health Economics," Books, Edward Elgar Publishing, number 3572.
    14. Diamond, P. A. & Hausman, J. A., 1984. "Individual retirement and savings behavior," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 81-114.
    15. Peter Hicks, 2011. "The surprisingly large policy implications of changing retirement durations," Social and Economic Dimensions of an Aging Population Research Papers 284, McMaster University.
    16. Michaud, Pierre-Carl, 2003. "Joint Labour Supply Dynamics of Older Couples," IZA Discussion Papers 832, Institute of Labor Economics (IZA).
    17. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1, October.
    18. Lindeboom, Maarten & van Doorslaer, Eddy, 2004. "Cut-point shift and index shift in self-reported health," Journal of Health Economics, Elsevier, vol. 23(6), pages 1083-1099, November.
    19. Gloria J. Bazzoli, 1985. "The Early Retirement Decision: New Empirical Evidence on the Influence of Health," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 214-234.
    20. Roberts, J & Rice, N & Jones, A.M, 2008. "Early retirement and inequality in Britain and Germany: How important is health?," Health, Econometrics and Data Group (HEDG) Working Papers 08/27, HEDG, c/o Department of Economics, University of York.
    21. Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, vol. 28(2), pages 565-637, June.
    22. Romain Duval, 2003. "The Retirement Effects of Old-Age Pension and Early Retirement Schemes in OECD Countries," OECD Economics Department Working Papers 370, OECD Publishing.
    23. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
    24. Disney, Richard & Emmerson, Carl & Wakefield, Matthew, 2006. "Ill health and retirement in Britain: A panel data-based analysis," Journal of Health Economics, Elsevier, vol. 25(4), pages 621-649, July.
    25. Fields, Gary S. & Mitchell, Olivia S., 1984. "The effects of social security reforms on retirement ages and retirement incomes," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 143-159, November.
    26. Mario Cleves & William W. Gould & Roberto G. Gutierrez & Yulia Marchenko, 2010. "An Introduction to Survival Analysis Using Stata," Stata Press books, StataCorp LP, edition 3, number saus3, March.
    27. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
    28. Jones, Andrew M. & Rice, Nigel & Roberts, Jennifer, 2010. "Sick of work or too sick to work? Evidence on self-reported health shocks and early retirement from the BHPS," Economic Modelling, Elsevier, vol. 27(4), pages 866-880, July.
    29. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-956, July.
    30. James Vaupel & Kenneth Manton & Eric Stallard, 1979. "The impact of heterogeneity in individual frailty on the dynamics of mortality," Demography, Springer;Population Association of America (PAA), vol. 16(3), pages 439-454, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Melanie Ward-Warmedinger & Corrado Macchiarelli, 2013. "Transitions in labour market status in the European Union," LEQS – LSE 'Europe in Question' Discussion Paper Series 69, European Institute, LSE.
    2. Brown, Alessio J.G. & Fraikin, Anne-Lore, 2022. "The old-age pension household replacement rate in Belgium," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    3. Costa-Font, Joan & Vilaplana-Prieto, Cristina, 2023. "Caregiving subsidies and spousal early retirement intentions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 550-589, October.
    4. Nicolas Sirven & Thomas Barnay, 2017. "Expectations, loss aversion and retirement decisions in the context of the 2009 crisis in Europe," International Journal of Manpower, Emerald Group Publishing Limited, vol. 38(1), pages 25-44, April.
    5. Ivleva, Galina (Ивлева, Галина) & Koroteeva, Oksana (Коротеева, Оксана), 2015. "The Mechanisms of Public Control Over the Activities of Public Authorities in Modern Russia [Механизмы Общественного Контроля За Деятельностью Органов Государственной Власти В Современной России]," Published Papers mn66, Russian Presidential Academy of National Economy and Public Administration.
    6. Jacques Wels, 2016. "The Statistical Analysis of End of Working Life: Methodological and Sociological Issues Raised by the Average Effective Age of Retirement," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(1), pages 291-315, October.
    7. Haan, Peter & Tolan, Songül, 2019. "Labor supply and fiscal effects of partial retirement – The role of entry age and the timing of pension benefits," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    8. Melanie Ward-Warmedinger & Corrado Macchiarelli, 2014. "Transitions in labour market status in EU labour markets," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-25, December.
    9. Justine Bondoux & Thomas Barnay & Thomas Renaud & Florence Jusot, 2021. "How Does Disability Affect Income? An Empirical Study on Older European Workers," Erudite Working Paper 2021-05, Erudite.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nigel Rice & Jennifer Roberts & Andrew M. Jones, 2006. "Sick of work or too sick to work? Evidence on health shocks and early retirement from the BHPS," Health, Econometrics and Data Group (HEDG) Working Papers 06/13, HEDG, c/o Department of Economics, University of York.
    2. Jones, Andrew M. & Rice, Nigel & Roberts, Jennifer, 2010. "Sick of work or too sick to work? Evidence on self-reported health shocks and early retirement from the BHPS," Economic Modelling, Elsevier, vol. 27(4), pages 866-880, July.
    3. Gimenez-Nadal, J. Ignacio & Molina, Jose Alberto, 2015. "Health status and the allocation of time: Cross-country evidence from Europe," Economic Modelling, Elsevier, vol. 46(C), pages 188-203.
    4. García-Gómez, Pilar & Jones, Andrew M. & Rice, Nigel, 2010. "Health effects on labour market exits and entries," Labour Economics, Elsevier, vol. 17(1), pages 62-76, January.
    5. J. Ignacio Gimenez-Nadal & Jose Alberto Molina, 2016. "Health inequality and the uses of time for workers in Europe: policy implications," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-18, December.
    6. Maarten Lindeboom, 2012. "Health and Work of Older Workers," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 3, Edward Elgar Publishing.
    7. Subhasree Basu Roy, 2018. "Effect of Health on Retirement of Older Americans: a Competing Risks Study," Journal of Labor Research, Springer, vol. 39(1), pages 56-98, March.
    8. Harris, M.N. & Zhao, X. & Zucchelli, E., 2016. "The dynamics of health and labour market transitions at older ages: evidence from a multi-state model," Health, Econometrics and Data Group (HEDG) Working Papers 16/30, HEDG, c/o Department of Economics, University of York.
    9. Jennifer Roberts & Nigel Rice & Andrew M. Jones, 2008. "Early retirement and inequality in Britain and Germany: How important is health?," Working Papers 2008012, The University of Sheffield, Department of Economics, revised Nov 2008.
    10. Maarten Lindeboom & Marcel Kerkhofs, 2004. "Subjective Health Measures, Reporting Errors and Endogeneity in the Relationship Between Health and Work," CEIS Research Paper 46, Tor Vergata University, CEIS.
    11. Manoj K Pandey, 2009. "Labor Force Participation among Indian Elderly: Does Health Matter?," Working Papers id:1987, eSocialSciences.
    12. Zucchelli, E. & Harris, M. & Zhao, X., 2012. "Ill-health and transitions to part-time work and self-employment among older workers," Health, Econometrics and Data Group (HEDG) Working Papers 12/04, HEDG, c/o Department of Economics, University of York.
    13. Pandey, Manoj K., 2009. "Labor force participation among Indian elderly: does health matter?," MPRA Paper 15394, University Library of Munich, Germany.
    14. Mark N. Harris & Xueyan Zhao & Eugenio Zucchelli, 2021. "Ageing Workforces, Ill‐health and Multi‐state Labour Market Transitions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(1), pages 199-227, February.
    15. Manoj K. Pandey, 2009. "Labor Force Participation among Indian Elderly: Does Health Matter?," ASARC Working Papers 2009-11, The Australian National University, Australia South Asia Research Centre.
    16. Kreider, Brent & Pepper, John V., 2007. "Disability and Employment: Reevaluating the Evidence in Light of Reporting Errors," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 432-441, June.
    17. Sarah Brown & Jennifer Roberts & Karl Taylor, 2010. "Reservation wages, labour market participation and health," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(3), pages 501-529, July.
    18. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "Award errors and permanent disability benefits in Spain," Economics Working Papers 966, Department of Economics and Business, Universitat Pompeu Fabra.
    19. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers 13-170/V, Tinbergen Institute.
    20. Beni­tez-Silva, Hugo & Ni, Huan, 2008. "Health status and health dynamics in an empirical model of expected longevity," Journal of Health Economics, Elsevier, vol. 27(3), pages 564-584, May.

    More about this item

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:erp:leqsxx:p0058. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Katjana Gattermann (email available below). General contact details of provider: http://www2.lse.ac.uk/europeanInstitute .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.