Reducing Early Retirement in Europe: Do Working Conditions Matter?

The paper argues that the existing literature, based on the Survey of Health, Ageing and Retirement in Europe (SHARE) data, on how working conditions impact on early retirement preferences/plans is hampered by the fact that the approach adopted to capture individuals’ early retirement plans fails to acknowledge that these preferences/plans are defined by reference to the rules that regulate the entitlement to pension benefits. In doing so, these studies risk overestimating the impact of working conditions on early retirement plans. We put forward a more accurate way of capturing individuals’ early retirement preferences/plans, which consists in using information on the age at which respondents plan to start collecting the basic pension benefits, and then computing whether the respondent plans to retire before the official age of retirement in his country of residence. Using SHARE microdata, wave 4, we show that individuals exposed to an imbalance between effort and rewards at work (Siegriest Journal Journal of Occupational Health Psychology, 1(1), 27–41,1996 ) are more likely to plan to take-up early retirement. We also show that the effect of poor working conditions is smaller than one would find using the previous approach to the measurement of early retirement preferences/plans.