Income mobility in old age in Britain and Germany

Asghar Zaidi, Joachim Frick and Felix Buchel

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The increases in human longevity in recent decades and the trends for early retirement have posed new challenges for policy makers, and require a holistic understanding of the processes that influence the economic resources of older people. This paper contributes to this knowledge by examining the income mobility experienced by older people living in Britain and Germany during the 1990s, and by identifying personal attributes and life-course events that influenced its direction and likelihood. The analysis uses the British Household Panel Survey (BHPS) and the German Socio-Economic Panel (SOEP) panel data. The comparative perspective yields insights about the different income experience of older people in the two markedly different welfare regimes. Results show that old-age income mobility is more pronounced in Britain than in Germany, and that in both countries its occurrence is particularly associated with changes in living arrangements, in the employment status of the co-resident family members and with widowhood among women. Unemployment during working life is also associated with significant negative later life income mobility. Among those on low incomes, a high share of income from an earnings-related pension had a significant and positive effect in both countries. One policy implication is the need to strengthen the social safety net, to safeguard against downward income mobility in old age, particularly among widows. Policy incentives are required to encourage flexible living arrangements in old age, as well as a greater protection from unemployment during working life, more so in Germany than in Britain.

Keywords: income mobility; old age; pensions; Britain and Germany (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-12
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http://eprints.lse.ac.uk/6300/ Open access version. (application/pdf)

Related works:
Working Paper: Income Mobility in Old Age in Britain and Germany (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:6300

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