Income Mobility in Old Age in Britain and Germany

30 Pages Posted: 14 Jul 2008

See all articles by Felix Büchel

Felix Büchel

Max Planck Institute for Human Development; Institute for the Study of Labor (IZA)

Joachim R. Frick

German Institute for Economic Research (DIW Berlin) (Deceased) ; Institute for the Study of Labor (IZA) (Deceased)

Asghar Zaidi

London School of Economics & Political Science (LSE) - Department of Social Policy and Administration

Date Written: December 2004

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.

JEL Classification: J1

Suggested Citation

Büchel, Felix and Frick, Joachim R. and Zaidi, Asghar, Income Mobility in Old Age in Britain and Germany (December 2004). LSE STICERD Research Paper No. CASE089, Available at SSRN: https://ssrn.com/abstract=1159320

Felix Büchel (Contact Author)

Max Planck Institute for Human Development ( email )

Lentzeallee 94
D-14195 Berlin, 14195
Germany
+49 30 8240 6427 (Phone)
+49 30 8249 939 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Joachim R. Frick

German Institute for Economic Research (DIW Berlin) (Deceased) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Institute for the Study of Labor (IZA) (Deceased)

P.O. Box 7240
Bonn, D-53072
Germany

Asghar Zaidi

London School of Economics & Political Science (LSE) - Department of Social Policy and Administration ( email )

Houghton Street
London, England WC2A 2AE
United Kingdom

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