Career histories as determinants of gendered retirement timing in the Danish and Swedish pension systems

Abstract

After reforms in pension systems had taken place in most European countries within the last two decades, the concern was raised that women may be disadvantaged by these reforms. It is suggested that they are faced with a higher financial need to work longer. Retrospective data from SHARELIFE are used to run an event history analysis on the timing of the final employment exit, separately for gender, country and exit cohort. This study aims to disentangle the influence of gendered labour markets and pension regulations on retirement timing by investigating conditions in Denmark and Sweden. Some evidence was found that women compensate for lower labour market attachment due to long part-time periods by working longer, especially in younger cohorts. This seems to depend on the pension system. In countries with broad basic pensions, high replacement rates for low-income groups and fewer penalties for early retirement, the compensation is suggested to be less frequent. This study indicates the growing importance of the “compensation hypothesis” compared to the “status maintenance hypothesis” of previous careers in relation with retirement timing.

Gender Differences in Retirement in a Welfare State with High Female Labour Market Participation and Competing Exit Pathways

“…There was no evidence that having had children affected career length and retirement timing any differently for women and men in Finland. This is in contrast with findings from a recent study on two other Nordic countries, Sweden and Denmark, where longer career breaks for women were associated with later retirement (König, 2017).…”

“…At the same time, shorter careers may mean lower levels of pension accrual. According to the 'compensation hypothesis', this may lead to women, especially in dual earner societies, deferring retirement until it is financially feasible (Finch, 2014;König, 2017). This effect might be stronger for divorced women who (re)enter the labour market after separation (Fasang, Aisenbrey and Schömann, 2013;Finch, 2014).…”

“…According to the former, better-educated women in higher occupational positions and with higher income will be more attached to the labour market and retire later. According to the latter, women need to work longer because of their lower-qualified and lower-paid jobs over the life course (Finch, 2014;König, 2017). Radl (2013) found support for a 'primacy of class thesis' in retirement, arguing that differences in retirement between men and women are primarily explained by women having lower occupational statuses, especially in the case of 'involuntary' early exit.…”

“…Gender differences in retirement should be seen in their institutional context (Fasang, 2010;König, 2017). Finland has a hybrid pension system, consisting of two main tiers.…”

Who does not intend to retire? Mothers' opportunity costs and compensation at later ages in Europe

“…Third, although our focus was to compare welfare regimes, our additional comparisons to see country-specific differences within the same welfare regimes found different effects of part-time work between Denmark and Sweden; Danish mothers who have worked mostly part-time are more likely to intend to retire early. This finding is consistent with König (2017), who found that longer years in part-time work lead to the early retirement of Danish women while delaying the retirement of Swedish women. The country-specific differences within the social democratic regime may be due to differences in pursued family policies (Gupta et al, 2008) as equalisation of parents' use of parental leave is more promoted in Sweden than Denmark (Pylkkänen and Smith, 2004).…”