Late careers and socio-economic structures in Europe

Abstract

"In this paper we investigate the effects of demographic, economic and labour-market structures on labour-force participation and transition to retirement for older males in eleven European countries. Theoretically, our analysis is guided by considerations of intragenerational competition and intergenerational substitution. Following Easterlin’s hypothesis that intragenerational competition rises with cohort size, we assume a negative effect of cohort size on labour-force participation and a positive effect on early retirement. Taking into account that different cohorts are substitutes at least to a certain extent, we assume that the probability for early retirement will be reduced by a high intergenerational exchange ratio in favour of older workers. Thus, labour-force participation is both influenced by the populations' age structure when entering the labour-force and during the career. Moreover, low shares of graduates in older cohorts are expected to reduce older workers' chances of being employed. Next to demographic structures, general economic conditions like GDP per capita and its development during working life force or hamper employment of older workers. Additionally, labour-market structures like unemployment rates, the extent of part-time work or the amount of service jobs influence individual labourforce participation and transition to retirement. To test these hypotheses, we use merged data from the first two waves of SHARE and macro-level indicators. We estimate a two-level random-incept logit-model which allows to determine the share of variance in international late careers that can be attributed to country‐specific factors and to quantify the relative impact of specific socio-demographic and socioeconomic backgrounds. Our results imply that cross-national variation in labour-force participation is mainly driven by the instance of long-term unemployment and the share of highly educated older men. While our analyses confirm the hypothesis on intragenerational competition, we do not find evidence for intergenerational competition forcing early retirement." (author's abstract)