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Pathways to Retirement and Mortality Risk in The Netherlands

Modalités d’entrée à la retraite et risques de mortalité aux Pays-Bas

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Abstract

The success of policies aimed at keeping older workers in employment until the statutory retirement age in part depends on the health of these workers. For this reason we examine to what extent pathways to statutory retirement other than employment are associated with adverse health conditions as measured by increased mortality risk during retirement. To do so, we estimate a mortality risk model using Dutch administrative data. We find, conditional on labor market status at the age of 58 and compared to individuals who are employed until the statutory retirement age of 65, no increased mortality risk among individuals who, between the ages of 58 and 65, have been in early retirement or unemployment and an increased mortality risk among individuals who have drawn disability insurance benefits. Our results suggest that older workers other than those who qualify for disability insurance benefits, may, on average, have no significant health conditions that could adversely impact the effectiveness of reforms that create stronger financial incentives for continued employment until age 65.

Résumé

La réussite des politiques mises en place afin que les travailleurs restent sur le marché du travail jusqu’à l’âge légal de départ à la retraite dépend, entre autres, de la santé de ces travailleurs. Dans cet article, nous examinons dans quelle mesure les modalités de départ à la retraite autres que celle allant du statut d’employé à celui de retraité sont associées à des problèmes de santé estimés par une augmentation des risques de mortalité pendant la retraite. Un modèle de risques de mortalité est estimé à partir des données administratives néerlandaises. Nos résultats montrent que, selon le statut sur le marché du travail à l’âge de 58 ans et comparés à ceux qui restent employés jusqu’à l’âge légal de la retraite, les individus qui partent en retraite anticipée ou sont au chômage entre 58 et 65 ans ne présentent pas une augmentation des risques de mortalité, alors que cette augmentation existe pour les individus qui ont reçu des prestations d’assurance invalidité. Il semble donc que, à l’exception de ceux qui sont considérés comme pouvant avoir droit à l’octroi de prestations d’assurance invalidité, les travailleurs les plus âgés ne présentent pas un état de santé qui pourrait nuire à l’efficacité des réformes visant à mettre en place de fortes incitations financières pour maintenir les individus au travail jusqu’à 65 ans.

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Notes

  1. Recent reforms in the Netherlands are the introduction of job search requirements for older unemployed persons, stricter eligibility rules for the Disability Insurance program (De Vos et al. 2012), the abolishment of the favorable fiscal treatment of early retirement contributions (CPB 2005) and a tax exemption for individuals who continue working after age 62 (Stimulansz 2009).

  2. Empirical support for increased mortality risk among people on disability is available for Germany (Brockman et al. 2009), Norway (Gjesdal et al. 2007), and Sweden (Karlsson et al. 2007; Wallman et al. 2006).

  3. A related literature estimates the impact of health on employment. See, e.g., for the Netherlands Kerkhofs et al. (1999), and Lindeboom and Kerkhofs (2009).

  4. The mortality rate in 2010 among 58 to 64-year-old people is about 0.8% per year. Data limitations prevent incorporating mortality before age 65 in our model.

  5. Income is defined as disposable household income, i.e. net of taxes and social insurance contributions, measured in 2010 euros using the consumer price index and divided by the equivalence scale provided by Statistics Netherlands (Siermann et al. 2004).

  6. We use the wording “at least 39 %” because it may, for instance, be that a man is only employed at age 58 and not at later ages, hence he has zero years in employment after age 58. Table 4 provides more insights into labor market transitions between the ages 58 and 64. .

  7. More information about year-to-year labor market transitions of Dutch men and women at the end of their working life can be found in Been and Knoef (2011).

  8. We use a linear age function (in the index). Using age-specific dummy variables does not affect the results of this paper.

  9. Grundy and Holt (2001) argue that homeownership is a good proxy for older people’s socioeconomic status and controlling for birth cohort allows for trends over time (see, e.g., Janssen et al. 2004). We refer, for instance, to Duleep (1986), Huisman et al. (2004, 2005), Lindahl (2005), Marmot et al. (1991), Menchik (1993), Smith (1999) and Van Kippersluis et al. (2010) for empirical evidence and discussions on the socioeconomic variation in health and mortality.

  10. The published version of this latter study (Coe and Zamarro 2011) concludes that there are health-preserving effects of early retirement. This different conclusion is caused by a different sample selection and this may suggest that a further analysis on the robustness of this result is needed.

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Acknowledgments

We wish to thank Meltem Daysal, Manuel Flores, Ralph Stevens, the seminar participants at the Netspar workshops (December 2008; November 2010), Utrecht University School of Economics, Tilburg University and University of Santiago de Compostela, co-editor Catherine Gourbin and two anonymous referees for valuable comments and discussion. Financial support has been provided through Netspar by Stichting Instituut GAK.

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Authors and Affiliations

  1. Utrecht University School of Economics, PO Box 80125, 3508 TC, Utrecht, The Netherlands

    Adriaan Kalwij

  2. Tilburg University, Tilburg, The Netherlands

    Adriaan Kalwij

  3. University of Groningen, Groningen, The Netherlands

    Rob Alessie

  4. CentERdata (Tilburg University), Leiden University, Leiden, The Netherlands

    Marike Knoef

  5. Network for Studies on Pensions, Aging and Retirement (Netspar), Utrecht, The Netherlands

    Adriaan Kalwij, Rob Alessie & Marike Knoef

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Correspondence to Adriaan Kalwij.

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Kalwij, A., Alessie, R. & Knoef, M. Pathways to Retirement and Mortality Risk in The Netherlands. Eur J Population 29, 221–238 (2013). https://doi.org/10.1007/s10680-013-9283-8

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