Economic Consequences of Widowhood in Europe: Cross-country and Gender Differences

Namkee Ahn ()

No 2004-27, Working Papers from FEDEA

Abstract: We document in this paper, the economic consequences upon widowhood using both cross- section and panel data from European Community Household Panel. Main conclusions are as what follows. First, there is a large difference across country. The widowed persons in Greece and Portugal have lowest income, less than a half of that of Austrian widowed persons. Cross-country difference decreases somewhat if we consider household income net of housing costs due to higher home- ownership in low income countries. Second, income reduction upon widowhood is in general larger among widows than widowers. The gender difference is largest in Denmark, Spain, Austria and Finland, where widowers enjoy more than 30% higher income than widows. Third, the main culprit of gender difference in income situation of widowed persons is the pension regulation. As many widowed women depend on survivorship pension as their main income source and as the survivorship pension is much lower than old-age pension in most countries, widows suffer much larger income reduction than widowers with widowhood. As current elderly women and those in many coming years lived their working ages in a world where wives and mothers worked at home, raised children and did not work in the market, they will depend mostly on survivorship pension as their main income source. Consequently, their economic situation would not improve in the medium term unless pension regulations change to improve their economic situation

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