Why retire? Socioeconomic status and retirement reason in three different European welfare regimes

Abstract: Policy makers in most European countries have in recent decades reformed their pension systems with the aim of increasing labor market participation among older workers to solve the problem of an ageing population. The question arises whether delayed retirement is a sustainable solution or if it comes at the cost of certain groups in society. The reasons an individual might choose to retire are not yet fully understood, but must be considered in order to investigate whether there is unused labor capacity among the retired population. Using individual-level data on retired individuals in Scandinavian, Western European, and Southern European welfare regimes, this thesis aims to analyze whether socioeconomic status (SES) influences the likelihood of retiring due to illness or leisure reasons, relative to those who retire purely because they are eligible to receive old-age pension benefits. In addition, this thesis examines whether this influence varies between different types of welfare regime. Multinomial logistic regressions on self-stated retirement reasons were performed to answer the questions. Results indicate that there is an increased likelihood of retiring for leisure reasons among males with high SES, and that this effect is large in Southern welfare regimes, but results are too weak to confirm a relationship between low SES and the risk of retiring due to illness. Further, this thesis found an increased risk of retiring due to illness among highly educated females. This thesis encourages future research to further study the relationship between those with an increased risk of retiring due to illness reasons and the extent of their stated illness.