Career Interruptions: How Do They Impact Pension Rights?

Abstract

The aim of this article is to analyse the question of career interruptions and to evaluate their impact on pension retirement for French private sector workers. Using the last French survey on households' wealth (2003)(2004), we first study the career set-backs for individuals born between 1937 and 1949. We highlight the new trends in professional paths. The risk of unemployment and job flexibility has sharply risen. As a consequence, some cohorts appear to be more exposed to career interruptions. Second, we determine how pension rights for French employees are affected by different career accidents. We consider unemployment, part-time employment and inactivity periods. Our results show how, by compensating for some career accidents, the French legislation allows individuals to receive, in some cases, the same level of social security pension that they would have received with a smooth professional path. The Geneva Papers (2011Papers ( ) 36, 440-457. doi:10.1057Papers ( /gpp.2011 Keywords: career interruption; pensions; social security IntroductionThe retirement age and the standard of living of pensioners depend on a variety of individual and familial life routes: age of employment entry, children, life expectancy, unemployment, inactivity, etc. These deviations from a continuous career are more frequent than in the past in most OECD countries and could induce a strong impact on the age of retirement and on pension benefits. 1 The aim of this article is to evaluate the effects of several cases of career breaks on the retirement pension for French workers.The literature dealing with this subject highlights the specific situation of women. A lot of studies provide an analysis of women's career interruptions due to childbirth. Arun et al.2 and Malo and Munoz-Bullon 3 conduct this type of study respectively in the Australian and British cases. According to Arun et al., Arun et al. (2004). 3 Malo and Munoz-Bullon (2008). The Geneva Papers, 2011, 36, (440-457) r 2011 The International Association for the Study of Insurance Economics 1018-5895/11 www.genevaassociation.org women face income penalties because of their child-related career breaks. show that women tend to choose lower-prestige occupations in anticipation of their career interruptions. Nakamura and Ueda 4 investigate the determinants of career interruption following childbirth for married women in Japan. Their results show the difficulty for an educated woman to find an equivalent position when she quits her job due to childbirth. From Danish data, Gupta and Smith 5 assess the negative impact of children on mothers' human capital accumulation. In most cases, the number of children has a negative effect on women's wages and consequently on women's pensions.While children affect particularly women's careers, others career break determinants could be identified. The literature on the French case [6][7][8][9][10] shows that many individuals are now affected by several breaks during their professional trajectory due to unemployment, early retirement, par...

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