Well-being of older workers and retirees in Europe: comparing life satisfaction and capabilities.

Sohier, Lieze (1); Van Ootegem, Luc (1,2); Verhofstadt, Elsy (1) (2016). 'Well-being of older workers and retirees in Europe: comparing life satisfaction and capabilities.' Paper presented at the annual conference of the HDCA, Tokyo 2016.

One of the most important solutions to solve the financial challenges of the pension system in Europe is the creation of working careers that last longer than before. This will also benefit the older workers financially. Very little attention has been paid to the non-monetary effects of working at older age. We want to take into account the effect of working longer on other (non-financial) life dimensions. We do this by investigating the impact of working at senior age on the individual’s well-being. More specifically, we estimate the effect of the person’s status (employed or retired) on his well-being.
We use two subjective well-being variables. We consider a traditional life satisfaction indicator (as in Stiglitz et al., 2009 and as suggested by the OECD, 2013) and compare this with a capabilities measure. Capabilities are defined as the options or opportunities individuals have in life, which is essential to evaluate individual well-being (Alkire, 2005; Fleurbaey, 2006; Gasper, 2007; Kuklys, 2005; Robeyns, 2006; Schokkaert, 2009; Sen, 1985 and 1993). The capabilities framework is theoretically and ethically appealing, but implementation is a real challenge. Van Ootegem and Verhofstadt (2012 & 2015)  show that information about (perceived) capabilities is a useful additional ingredient for the assessment of general well-being. Here, we compute a capabilities indicator as a factor score based on three items: “How often do you feel that what happens to you is out of your control?”, “How often do you think that you can do the things that you want to do?” and “How often do you feel that life is full of opportunities?” (often, sometimes, rarely or never).  As a robustness check we also perform our analysis on the three items separately. The three items refer to feelings and thoughts over the past four weeks.
We use data from the Survey of Health, Ageing and Retirement in Europe (SHARE). SHARE contains extended micro data on physical and mental health, socio-economic status, social and family networks of the senior population in Europe (Börsch-Supan & Alcser, 2005; Börsch-Supan et al., 2013). The target population of the survey is European residents aged 50 and over. We use the second (2006-7), fourth (2010-11) and fifth (2012-13) observation period and include the countries that have observations for the well-being question for these periods, i.e. Austria, Belgium, Denmark, France, Germany, Netherlands, Spain, Sweden and Switzerland. In total our sample of people who either work or are retired consists of 49,291 observations or 30,497 individuals. We have an unbalanced panel as not all individuals participate in all three periods. We estimate a fixed effects models.
We take into account factors that influence the relation between the (employment or retirement) status and well-being, such as working conditions, social support, the health and financial situation of the respondents. Additionally, we include a notion of freedom of choice in the decision to retire or to work longer. Freedom of choice in the retirement decision is found to be a significant determinant of the retirees’ well-being (Bender, 2012). Many surveys have elucidated negative attitudes of employees and employers towards longer working careers (Conen, Henkens, & Schippers, 2012; De Graaf, Peeters, & Van der Heijden, 2011; Ybema, Geuskens, & Hengel, 2009). We develop a proxy for (in)voluntary workers based on a question about the preference for being retired rather than for working (longer).This information about the freedom of choice concerning the employment status will help our understanding of the effect of working longer on overall well-being.
To summarize, our research question is two-folded: first, have senior (in)voluntary workers a lower, equally or higher well-being than their retired peers? Second, is there a different answer to the former question when we use a satisfaction or a capabilities measure of well-being? A descriptive (bi-variate) analysis shows that the highest well-being (satisfaction as well as capabilities)  is for voluntary workers, followed by retirees. Involuntary workers have a significant lower overall well-being.  When correcting for age, health, partner and income, the (multi-variate) panel estimations show differences between the use of life satisfaction and capabilities as well-being indicator. The results of the descriptive statistics are confirmed when using life satisfaction, but when using capabilities the results indicate that the retirees as those having most opportunities in life. For life satisfaction, having no partner or having a partner in bad health is equally bad. For capabilities having a partner in bad health is more detrimental than having no partner at all.
Acknowledgement of SHARE:
This paper uses data from SHARE Waves 2, 4 and 5 (DOIs: 10.6103/SHARE.w2.260, 10.6103/SHARE.w4.111, 10.6103/SHARE.w5.100). The SHARE data collection has been primarily funded by the European Commission through the FP5 (QLK6-CT-2001-00360), FP6 (SHARE-I3: RII-CT-2006-062193, COMPARE: CIT5-CT-2005-028857) and FP7 (SHARE-PREP: N°211909, SHARE-LEAP: N°227822, SHARE M4: N°261982). Additional funding from the U.S. National Institute on Aging (U01_AG09740-13S2, P01_AG005842, P01_AG08291, P30_AG12815, R21_AG025169, Y1-AG-4553-01, IAG_BSR06-11, OGHA_04-064), the German Ministry of Education and Research and from various national funding sources is gratefully acknowledged (see www.share-project.org).

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