Health, retirement and inequality: Can Germany and the UK learn from each other?

Abstract

This study attempts to understand the effect of health on the decision of older workers to leave the labour market – a decision which is made within the context of the pension and benefit systems of the UK and Germany. The authors found that health is an extremely important factor in the retirement decision for both men and women in the UK and Germany. The effects of poor health seem to be greater in the UK than Germany. The size of the health effect is larger than that of pension entitlement and income in both countries. The results also suggest that it is health shocks rather than a continual level of poor health that are important in the retirement decision.