Labor Market Participation and Postponed Retirement in Central and Eastern Europe

Robert I. Gal , Hungarian Demographic Research Institute
Márta K. Rado, Erasmus University Medical Centre, Rotterdam

We apply the Sanderson-Scherbov conceptual framework of characteristic ages in the analysis of the effect of population ageing on pension systems. Our fixed schedule is the effective retirement age (the average age of leaving the labor market) with the qualification that despite of being fixed in a given year it changes over time. Our variable schedule is life expectancy at the effective retirement age. We demonstrate that despite of the ageing process getting momentum in the early 2000s the effective retirement age grew so rapidly that life-expectancies at the effective retirement age remained broadly unchanged or even decreased in several countries. Ironically, the “fixed” schedule changed so fast that the contours of the “variable” schedule remained largely intact. We also find indication (though not yet systematic evidence) of the effective retirement age moving in parallel with the changing educational composition of subsequent cohorts getting close to retirement, which in turn is the result of human capital investments (an expansion of secondary education starting in the 1950s and 1960s) long decades before. As it seems, the negative consequences of population ageing on the pension system can be effectively hedged against by human capital investments. We present evidence on the European Union (22 member states) but our primary focus is the Central and Eastern European region.

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 Presented in Session 107. Flash Session Fertility, Family and the Life Course