Patterns of Labour Market Exit in Germany and the UK

Abstract

This study gives an overview of the pathways from work to retirement in Britain and Germany. Although the institutional incentives differ considerably, both countries face a trend towards early retirement. In Germany, this development was mostly attributed to the favourable conditions in the social security system. In the UK, the increasing coverage of occupational and private pensions seems to be responsible for the low labour force participation of older persons. For the duration analysis, a distinction is made between various exit paths from work. The results indicate that the social security or occupational pension schemes have a strong impact on the age a person leaves the labour force for retirement. Pension incentives can less explain the moves into other states of nonemployment.