Working Life and Retirement Expectancies at Age 50 by Social Class: Period and Cohort Trends and Projections for Finland

Abstract

Objectives: The balance between the amount of time spent in work and in retirement underlies the long-term sustainability of the social security system. We examined socioeconomic differences in how increasing longevity is distributed between labor market statuses in Finland.

Method: We used register data and the Sullivan method to analyze life expectancy at age 50 spent in different labor market statuses over the period 1989-2012 and across cohorts born in 1938-1953. We projected the future mortality and labor market participation rates of partially observed cohorts.

Results: Both working life expectancy at age 50 and the share of remaining life spent in work have increased across periods following the recession of the early 1990s, and across successive cohorts. The trends were similar across the social classes, but there were large differences in the numbers of years spent in various states: for the most recent period and the youngest cohort, we find that compared with upper non-manual employees, male and female manual workers were expected to spend 3.6-3.7 fewer years in work, 1.7-4.7 fewer years in statutory retirement, and 3.2-3.9 more years in other forms of nonemployment.

Discussion: Our finding that the share of remaining life at age 50 spent in work is increasing implies that pressure on the welfare system is not as severe as is commonly thought.

Keywords: Labor market participation; Life expectancy; Longevity; Projections; Socioeconomic status; Trends.