Labour mobility and retirement Agar Brugiavini, Mario Padula, Giacomo Pasini, Franco Peracchi Svendborg, July 2010

Work history and pensions Workers retiring under the same pension regime might receive very different benefits  Timing and length of unemployment spells: Gaps in career associates with gaps in contribution  Number of jobs and job tenure If benefits are not fully portable, higher mobility leads to lower pension rights  “Smoothing” due to social security systems design  This paper: relates incidence and duration of unemployment, tenure in a job, to replacement rate at retirement

Number of jobs per individual, by gender  Men have more jobs than women  North-South gradient in labour mobility

Number of jobs per individual, by cohort  General pattern: labour mobility is higher for younger generations

Number of job changes with at least 6 months of gap  Most changes job-to-job: SE women have 5 jobs in their life, but just one long gap out of employment  Women more likely to have non-employment spells (maternity)

Average number of years spent in unemployment  Based on individuals who experienced at least one unemployment episode  Women at risk of longer unemployment spells  We pool unempl and looking for a job with unempl and not searching

Employment duration distribution  SE, DK: many jobs, many short spells  IT, ES, CZ, GR: few jobs, no search, no short durations  Long right tails

Replacement rates by country  IN: only retired individuals who moved from main job into retirement. No other pathways (e.g. disability)  Reduced cross coutry variability compared to career patterns: smoothing due to Socail Security Systems design  No significant gender/cohort differences within country (small sample?)

Unemployment and replacement rates More unemployment episodes lead to lower replacement rates Longer unemployment episodes lead to lower replacement rates SESE DKDK NLNL BEBE FRFR CHCH ATAT ITIT ESES GRGR PLPL CZCZ EDED WDWD ReplacementRate Unemployment spells per individual Country means Fitted values

Employment and replacement rates POSITIVE LINK between number of jobs and replacement rate NO LINK lenght of empl spells and replacement rates (once Greece is not considered) Job-to-job changes signal career/earnings/contribution improvements

Legal old age pension at retirement and replacement rates Where govt induce to work longer, positive effect on benefits  Formula effect: depend on how career lenght enters benefit computation  “Filling” effect: longer career compensate for gaps

Conclusions  Labour mobility varies across Europe, with a North-South gradient  Work life histories affect pension entitlements  GAPS matter: number of unemployment episodes and their duration reduce replacement rates  LABOUR MOBILITY signal career improvement, not weak labour market attachment: faster career, faster contribution accrual  Labour market de-regulation is not detrimental for income at retirement, provided it is tempered by policies that limit long-term unemployment