The Length of Working Life in Spain: Levels, Recent Trends, and the Impact of the Financial Crisis

Abstract

While there has been considerable debate about extending the length of working life, relatively little is known about this issue. We use data from the Spanish Continuous Working Life Sample for 2004-2013 to calculate period working life tables, which in turn allows us to assess the impact of the financial crisis on working life expectancy in Spain. Before the recession hit, working life expectancy in Spain was around 38 years for males and 33 years for females. The recession had a tremendous impact on the Spanish labor market, but the effects differed considerably by gender and occupational category. Men working in skilled non-manual jobs were less affected, while men working in unskilled manual jobs lost close to 14 years of working life expectancy. Women were less affected than men. With working life expectancy decreasing, the average proportion of lifetime spent in unemployment and outside the labor market increased markedly, whereas the average number of years spent in retirement changed only a little. When we decompose losses in working life expectancy by age group, we find that economic fluctuations affect both older and younger workers. This result suggests that policies that focus on retirement ages only are incomplete. We also compare our findings to the results obtained by Sullivans method, which is based on prevalence rates rather than the incidence-based working life table approach. We find that the use of Sullivans approach does not accurately reflect the levels of and the trends in working life expectancy.

Keywords: Great Recession; Length of working life; Multistate life table; Spain; Sullivan’s method; Working life expectancy.

Fig. 1

Transition probabilities by age (15–64) and gender: probability of becoming employed conditional on being inactive; probability of staying employed; probability of retiring out of employment; 2012/2013. Source: Own calculation, CWLS 2004–2013

Fig. 2

Remaining life expectancy in employment (WLE) at age 15, 2004 to 2012 by occupational category and gender. Source: Own calculation, CWLS 2004–2013

Fig. 3

Decomposition of change in WLE between 2006/2007 and 2008/2009 by age group for males by occupational category. Source: Own calculation, CWLS 2004–2013

Fig. 4

Decomposition of change in WLE between 2006/2007 and 2008/2009 by age group for females by occupational category. Source: Own calculation, CWLS 2004–2013

Fig. 5

Average time spent in the labor force (AWLE; in years) 2004–2012 by year and gender, calculated using transition probabilities and Markov chains (Markov CWLS); participation rates obtained from the CWLS and Sullivan’s method (Sullivan CWLS); and estimates provided by Eurostat based on Sullivan’s method. Source: Eurostat; own calculation, CWLS 2004–2013