The determinants of the timing of retirement: a cross-country comparison

To ensure fiscal stability in the face of an ageing population, it is essential to stimulate labour market participation among older people across the world. Early retirement could increase the burden of supporting the older generation in the society, while delayed retirement could potentially improve the wealth accumulation for individuals. This thesis aims to examine how the observed retirement situation reflects health status and wealth position among people aged 45 to 80. The sample countries cover Austria, Germany, Sweden, Spain, Italy, France, Denmark, Switzerland, Belgium, and China, with comparative analysis carried out. The second chapter investigates early retirement in nine European countries using dynamic models to analyse longitudinal associations which were explored by linking health, wealth and working conditions of respondents in the previous wave with prospective labour market participation in the follow-up waves. The analysis is based on five waves of the Survey on Health, Ageing and Retirement in Europe (SHARE). The study comprises two parts. One part is based on the two-year dynamic model to predict premature retire two years later. Another part presents the health and wealth effects observed four years previously on early retirement behaviour in the current survey year. We find that severe health problems in the past few years can lead to a decrease in the participation rate of individuals in the labour market in Europe. Moreover, there is a strong negative relationship between net non-housing wealth, housing mortgage and early retirement. High debt burdens are less likely to stimulate an early retirement. Furthermore, people who retire earlier than the state pension age are more frequently from the disadvantaged working environment. Chapter 3 makes a comparison analysis before and after the 2007-2008 Global Financial Crisis by employing the same five waves and nine countries in SHARE dataset as of chapter 2. The study examines the associations of health status, wealth position, and pension income with delayed retirement for a cohort of people aged 65 to 80. This study delivers the evidence that a better situation in either mental or physical health shall widely promote the growth of the labour supply for those 65 to 80 years of age in old age in Europe. Additionally, those individuals with higher housing values and non-housing values can remain on old-age employment. Evidence has provided for Sweden, Denmark and France. Moreover, people with high pension benefits are less likely to extend their working life. Self-employment presents a significant factor in the extension of labour market participation into older age. We next turn to a Chinese study in Chapter 4. The study does both longitudinal analysis and treatment effects. We pool all three waves of the China Health and Retirement Longitudinal Study (CHARLS) and do comparison analysis by regions. We estimate treatment effects in the Propensity Score Matching (PSM) section. We observe a strong negative association between diseases, poor health and labour market participation. Stroke, memory problems and mental health problems are the top three chronic diseases that could push respondents out of the labour market at an early age. By contrast, stroke, heart problems, diabetes are the top three diseases that reduce working life. A high level of pension income received suggests a lower rate of labour participation. Pension contributors are less likely to retire before compulsory retirement age. Furthermore, rural residents show higher retention rate in the labour market, compared to urban residents