Determinants of Retirement Decisions in Europe and the United States: A Cross-National Comparison of Institutional, Firm-level and Individual Factors

Faced with demographic ageing, many developed countries have undergone a substantial change in their policies toward older workers, increasingly promoting longer working lives. The project reconstructed this policy shift from early retirement to “active ageing” and analysed its implications for patterns of social inequality from a comparative perspective.

In the beginning, we developed a conceptual framework to analytically link institutional changes with the timing and voluntariness of retirement transitions. In a first comparative research phase, the changing context of retirement transitions was described on a national, firm, and individual level in collaboration with experts from 11 European countries, the US, and Japan. This systematic, cross-national comparison demonstrated that the major pension and labour market reforms which were implemented throughout the last 15 years have been effective in meeting their goal of delaying retirement. However, preliminary findings based on aggregate labour market data indicated that not all older workers seem to profit from this trend.

In a second step, we empirically tested this assumption using individual-level data from two EU Labour Force Survey modules, particularly focusing on the transition to retirement (2006/2012). Regression analyses predicting the timing and the reasons for retirement corroborated the previously observed trend of an increase in the employment exit age across countries. Yet, they also highlighted that this general increase in employment is accompanied by rising social inequalities in the voluntariness of retirement transitions. Weaker labour market groups (such as the low-skilled, women, and migrants) are disproportionately faced with involuntary labour market transitions, either through involuntary retirement or through a forced continuation of work due to financial necessity. Such inequalities primarily emerged in countries where pension reforms have not been accompanied by sufficient employment support through active labour market and lifelong learning policies.