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NoWork Report Summary

Project ID: 661580
Funded under: H2020-EU.1.3.2.

Periodic Reporting for period 1 - NoWork (The long-term effects of unemployment on older workers: Studying life-course influences in social context)

Reporting period: 2016-05-01 to 2017-12-31

Summary of the context and overall objectives of the project

Europe’s population is currently the oldest in the world, and it is still ageing. This demographic shift is changing societies in an unprecedented way. Researchers and policy-makers fear that we will only have sustainable pension schemes and a sufficiently numerous workforce if people work until old age. Consequently, many current policies strive to increase workforce participation and delay retirement. But can such policies for older workers be effective? Life-course scholars argue that experiences have time-delayed effects. What people experience during youth and mid-age influences whether they work in old age. Thus, policies for older workers may intervene at too late an age to make a difference. This study investigates time-delayed effects on older workers, focussing on the effects of unemployment spells, which are said to scar work biographies and permanently hamper careers. This study found that life-courses across Europe follow a small number of characteristic patterns, with men’s life-courses being more homogenous then women’s. Men’s life-courses are usually structured around paid work, with the biggest difference being whether retirement is preceded by work, unemployment, non-employment or poor health. Women’s life-courses are structured around the balance between paid work and childcare, with the biggest difference being whether both activities are combined or exclude one another. Gender-differences decrease over time, because men experience more spells of unemployment and non-employment, which lowers their workforce participation rates, and because women increasingly stream into the labour market, either by combining paid work and childcare or by not having children. However, this growing equality comes at a cost: Unemployment and non-employment among men increase their old age poverty risk; and childlessness reduces the number of future informal caregivers, possibly leaving older people with a lack of support. Individuals fare differently during economic crises, depending e.g. on their age and household situation. While unemployed youths can still influence how their further working careers turn out, unemployed older workers usually leave the labour market into non-employment or pension. Individuals in equal partnerships, where both partners work for pay to the same degree, most likely retire into pension. Individuals in unequal partnerships, where partners work for pay to different extents, however, most likely retire into non-employment. Unequal partnerships can e.g. evolve because one partner experiences unemployment or abstains from paid work to look after children. These insights underline that questions of unemployment and retirement are closely linked with the household economy. Policies facilitating women’s workforce participation, such as encompassing childcare policies, create more equal paid work divisions in households and help people to work longer and retire into pension. As such, they increase equality and help maintain a numerous workforce and financially sound pension schemes. At the same time, more men slip to the fringes of the labour market and possible shortages in old age care emerge. Therefore, coordinating workforce and pension policies, childcare policies and old age care policies promise more effective solutions with little unintended side-effects.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

Project outputs are a dataset on the life-histories of older Finns and three article manuscripts. The first manuscript describes the life-courses of older European though a small number of models. Men’s life-courses can be well captured in a tripartite model, describing lives as a sequence of education, work, and retirement. Women’s life-courses vary: The tripartite model is common in Northern Europe, whereas Southern and Central European women often abstain from paid work or interrupt their careers for childcare. Pension policies only reach those who work for pay, making them most effective in Northern Europe, whereas they need to be coordinated with childcare policies in Central and Southern Europe. Findings highlight problems with dependency ratios, which use age groups to assess the proportions of (in)dependent individuals. They serve for tracing population ageing over time and for assessing the reform pressure on pay-as-you-go-financed pension schemes. The existence of different life-course models means that age groups differ in their activities, and that labelling them as (in)dependent is an oversimplification. Dependency ratios should be interpreted with caution, especially in country-comparisons and time-series.
The second manuscript explores differences between the baby-boomers and generation X in Finland. It shows how life-courses reflect Finnish history, e.g. the late shift from an agricultural to a (post)industrial society. Notable cohort-differences are that women in the younger generation are better integrated into the labourmarket, and that the number of men outside the labourmarket increases. Unfortunately, women’s increasing workforce participation comes at the price of having children, women are under increasing pressure to combine paid work and caregiving to their frail parents, and the next generation of informal caregivers to older people may be too small.
The third manuscript studies how life-long work-arrangements among couples influence the retirement transition. Couples strike characteristic arrangements on how much each individual works for pay, which influences the retirement transition. Especially couples with equal labour market participation tend to retire into pension, whereas people in other arrangements tend to retire into non-employment. This effect is particularly strong in the Netherlands, it is weak in Sweden because of the high gender-equality, and it is weak in Spain because of the low number of working women. Findings suggest that helping women into paid work will help men and women to retire into pension, thereby increasing the retirement age.

Findings were disseminated e.g. through a PhD students' workshop and an international conference, two press releases, three popularized publications, six conference presentations, and two presentations at public events.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

This project underlines that the situation in old age partly depends on one’s experiences during youth and middle-age. Thereby, it shows that pension reforms can have only limited effects, because part of the retirement decision has already been made at an earlier age. Moreover, it stresses that effective retirement policies should target young and middle-aged people in addition to older people, capitalizing on the long-term effects of social intervention. Additionally, it shows how labour market policies, pension policies, childcare policies and old age care policies are interrelated. Reforms in one of these areas also affect the other areas. To achieve a high reform efficiency and limit unintended side-effects, a coordination of these policy areas is necessary. Finally, the insight that the retirement situation can be partly explained with earlier experiences entails that the retirement situation can also be partly predicted from earlier experiences. A follow-up project exploring this idea can help us identify early warning signals for social problems in old age, thereby improving our retirement forecasts. Potential beneficiaries are policymakers, pension insurances, national statistical offices, and social workers seeking to identify high-risk groups.

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