Early Retirement and Inequality in Britain and Germany: How Important is Health?

33 Pages Posted: 5 Jun 2009

See all articles by Jennifer Roberts

Jennifer Roberts

University of Sheffield

Nigel Rice

University of York - Derwent College

Andrew M. Jones

University of York - Department of Economics and Related Studies; Monash University - Centre for Health Economics

Date Written: May 1, 2009

Abstract

Both health and income inequalities have been shown to be much greater in Britain than in Germany. One of the main reasons seems to be the difference in the relative position of the retired, who, in Britain, are much more concentrated in the lower income groups. Inequality analysis reveals that while the distribution of health shocks is more concentrated among those on low incomes in Britain, early retirement is more concentrated among those on high incomes. In contrast, in Germany, both health shocks and early retirement are more concentrated among those with low incomes. We use comparable longitudinal data sets from Britain and Germany to estimate hazard models of the effect of health on early retirement. The hazard models show that health is a key determinant of the retirement hazard for both men and women in Britain and Germany. The size of the health effect appears large compared to the other variables. Designing financial incentives to encourage people to work for longer may not be sufficient as a policy tool if people are leaving the labour market involuntarily due to health problems.

Keywords: health, early retirement, hazard models

JEL Classification: J26, I1, C23, C41

Suggested Citation

Roberts, Jennifer and Rice, Nigel and Jones, Andrew M., Early Retirement and Inequality in Britain and Germany: How Important is Health? (May 1, 2009). SOEPpaper No. 188, Available at SSRN: https://ssrn.com/abstract=1413787 or http://dx.doi.org/10.2139/ssrn.1413787

Jennifer Roberts (Contact Author)

University of Sheffield ( email )

Dept of Economics
9 Mappin St
Sheffield, S1 4DT
United Kingdom

HOME PAGE: http://www.shef.ac.uk/economics/

Nigel Rice

University of York - Derwent College ( email )

Heslington
Centre for Health Research
York, YO10 5DD
United Kingdom

Andrew M. Jones

University of York - Department of Economics and Related Studies ( email )

Heslington
York, YO1 5DD
United Kingdom
+44-1904-43 3766 (Phone)

Monash University - Centre for Health Economics ( email )

Building 75, 15 Innovation Walk
Monash University
Clayton, Victoria 3800
Australia

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