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Reducing Early Retirement in Europe: Do Working Conditions Matter?

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Abstract

The paper argues that the existing literature, based on the Survey of Health, Ageing and Retirement in Europe (SHARE) data, on how working conditions impact on early retirement preferences/plans is hampered by the fact that the approach adopted to capture individuals’ early retirement plans fails to acknowledge that these preferences/plans are defined by reference to the rules that regulate the entitlement to pension benefits. In doing so, these studies risk overestimating the impact of working conditions on early retirement plans. We put forward a more accurate way of capturing individuals’ early retirement preferences/plans, which consists in using information on the age at which respondents plan to start collecting the basic pension benefits, and then computing whether the respondent plans to retire before the official age of retirement in his country of residence. Using SHARE microdata, wave 4, we show that individuals exposed to an imbalance between effort and rewards at work (Siegriest Journal Journal of Occupational Health Psychology, 1(1), 27–41, 1996 ) are more likely to plan to take-up early retirement. We also show that the effect of poor working conditions is smaller than one would find using the previous approach to the measurement of early retirement preferences/plans.

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Notes

  1. This model was later extended to incorporate the level of (socio-emotional and instrumental) support that workers receive at work, which can act as a buffer to job demands. In line with this (extended) ‘demand-control-support’ model, jobs characterised by high demands, low control and low support – iso-strain jobs - would have the stringiest effect on individuals’ physical and psychological well-being (Karasek and Theorell 1990; Van Der Doef and Maes 1999).

  2. Admittedly, Hurd and McGarry’s (1993) present several counter-intuitive results. For instance, the authors suggest that jobs that require bending or lots of physical effort have no significant statistical relation to workers’ expectations to be in work at ages 62 and 65. Not only that, their study suggests that jobs that don’t require any heavy lifting actually reduce the expected probability of working at ages 62 and 65.

  3. See question EP036_, SHARE Generic Questionnaire (SHARE 2004: 52–3).

  4. See question EP106_, SHARE Generic Questionnaire (SHARE 2004: 69).

  5. The choice of ‘Effort-Reward Imbalance’ model over Karasek’s (1979) ‘Demand-Control’ model is fundamentally data driven, as the SHARE questionnaire offers a more adequate set of variables to operationalise the Siegriest (1996) model.

  6. In wave 4, the SHARE project surveys 58,489 individuals aged 50 and over in 16 European countries (Austria, Germany, Sweden, Netherlands, Spain, Italy, France, Denmark, Switzerland, Belgium, Czech Republic, Poland, Hungary, Portugal, Slovenia, Estonia) and Israel. Data was collected between 2010 and 2011. The survey covers a range of issues from income and assets, work and retirement, physical and mental health, care or social networks. It thus provides a powerful tool for comparative analysis ageing related issues.

  7. We have excluded respondents from countries that have less than 30 observations in the dependent variable in the model, namely Denmark, Estonia and Poland. We also excluded respondents from Germany for which we only found 5 valid responses to questions EX007_ (expectation the Government will reduce pension benefits) and EX007_ (expectation the Government will reduce pension benefits), which then led to all respondents from this country being dropped from the model due to collinearity. We also excluded respondents from the Netherlands as, at the time the survey was conducted, the pension system did not allow for retirement before the ORA

  8. Siegrist et al. (2006) show that individuals aged between 55 and 59 are more likely than those under 55 to plan for early retirement. However, this is not the case for individuals’ age between 60 and 65.

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Acknowledgements

This paper uses data from SHARE wave 4 release 1.1.1, as of March 28th 2013. The SHARE data collection has been primarily funded by the European Commission through the 5th Framework Programme (project QLK6-CT-2001-00360 in the thematic programme Quality of Life), through the 6th Framework Programme (projects SHARE-I3, RII-CT-2006-062193, COMPARE, CIT5- CT-2005-028857, and SHARELIFE, CIT4-CT-2006-028812) and through the 7th Framework Programme (SHARE-PREP, N° 211909, SHARE-LEAP, N° 227822 and SHARE M4, N° 261982). Additional funding from the U.S. National Institute on Aging (U01 AG09740-13S2, P01 AG005842, P01 AG08291, P30 AG12815, R21 AG025169, Y1-AG-4553-01, IAG BSR06-11 and OGHA 04-064) and the German Ministry of Education and Research as well as from various national sources is gratefully acknowledged (see www.share-project.org for a full list of funding institutions).

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  1. Instituto de Ciências Sociais, Universidade de Lisboa, Av. Professor Aníbal de Bettencourt, 9, 1600-189, Lisbon, Portugal

    Amílcar Moreira, Alda Botelho Azevedo & Luís P. Manso

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  1. Amílcar Moreira
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Correspondence to Amílcar Moreira.

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Moreira, A., Azevedo, A.B. & Manso, L.P. Reducing Early Retirement in Europe: Do Working Conditions Matter?. Population Ageing 11, 265–284 (2018). https://doi.org/10.1007/s12062-017-9186-2

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