With an ageing population and the raising of the retirement age, older workers are increasingly vulnerable to shocks in the labour market or to health issues, which can have significant repercussions on their employment, income and pension entitlements. The comparative approach adopted by this project draws on the institutional similarities between France and Germany, whilst examining the differences in the design of their social security systems.
This project aims to quantify the impact of labour market and health-related shocks on inequalities and the standard of living of older workers in France and Germany, as well as to assess the extent to which social security systems mitigate these effects. By analysing how different social security models address the challenges posed by health and labour market shocks for older workers, this research aims to formulate policy recommendations designed to reduce inequalities both in the labour market for people of working age and in retirement conditions.
Initially, the research team will examine how labour market shocks (transitions into unemployment) and health shocks (periods of sick leave) affect the income trajectories of older workers. Using administrative data from both countries, the research team will analyse the distribution and correlation of these shocks, their short-term impact on employment and benefit take-up, as well as their long-term effects on retirement income. Particular attention will be paid to analysing the interaction and correlation between these shocks, as experiencing one shock often increases vulnerability to subsequent shocks.
Secondly, the research team will examine behavioural responses to social security reforms, focusing on how changes in the generosity of pension schemes, unemployment insurance (UI) and disability insurance (DI) influence individual decisions. The research team will analyse several reforms in both countries, including the French pension reforms altering eligibility ages and benefit levels, the German reforms on early retirement for long-term contributors, the interaction between unemployment benefit and pensions in France, changes in the generosity of disability insurance benefits in Germany, and the abolition of occupational disability insurance in Germany.
Finally, the research team will develop a life-cycle model for each country to assess the distributional and welfare implications of the various social security reforms. These models will incorporate lessons learnt from previous analyses, particularly regarding the correlation between health and labour market shocks, as well as the causal effects of policy reforms. This model will enable us to carry out counterfactual policy simulations and cross-country comparisons for both countries.
