Employment trajectories beyond retirement in Germany

Carola Burkert, Institute for Employment Research (IAB)
Daniela E. Hochfellner, Institute for Employment Research (IAB)

Extending employment careers of individuals beyond normal retirement age is one way of dealing with the impact of demographic aging on fiscal sustainability of the German statutory pension system. One alternative of working longer is to start claiming pension benefits and at the same time staying in the labor force. Our research complements existing literature by studying determinants of transitions to post retirement jobs within the same work environment vs. a different work environment of birth cohorts 1940 to 1942. We estimate proportional sub-hazard models accounting for competing risks using unique German social security data linked to pension accounts. Our findings suggest that retirees in Germany transition much faster when working in the same environment. Transition probabilities in a different work environment differs significantly by cohort and gender. The cumulative incidence of entering the same work environment decreases with increasing wages in the career job. Retirees with lower labor market attachment show a higher cumulative incidence of transitioning in different work environments. We also confirm the influence of firm characteristics on entering different job trajectories beyond retirement. JEL Codes: J14, J26 Keywords: post-retirement employment, retirement transitions, working longer