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European Policy Brief of the agenta Project: Live Longer, Work Longer?

Population ageing, propelled by a continuous increase in old-age life expectancy and a persistent replacement level fertility, presents a challenge for many welfare states to keep up their welfare expenditure on pension, health care and all old-age services. Options for tackling this daunting challenge, such as increasing fertility and immigration levels, cutting benefits and growing public debts, present numerous obstacles. Therefore, recent discussions on potential solutions have increasingly focused on how to encourage workers to postpone retirement, in order to maintain the size of the labour force which is necessary to provide economic support for the ageing society.

This policy brief presents recent trends in old-age labour supply, and addresses the issue of whether we work longer, as we live longer. Europe has witnessed a reversal of old-age labour supply, from a trend towards early retirement to a steady increase in the average effective retirement age (OECD 2006, 2014). The mean retirement age across the EU-27 dropped by nearly seven years between 1970 and the late 1990s. This trend decline, however, was reversed at the turn of the millennium for most EU countries, which is seemingly promising news, as longer working lives are important for sustaining welfare systems in ageing societies. While these trends correspond to changes in average retirement age across the entire population, it remains unclear whether these changes are universal across different socio-economic and demographic groups.

Read the full Policy Brief here.