By the sweat of their brow? The effects of starting work again after pension age on life satisfaction in Germany and the United Kingdom

Abstract

In recent years, the employment rates of people of pension age have increased considerably. However, longitudinal evidence on the effects of this employment on wellbeing which might contribute to an evaluation of this late-life work is scarce. Based on empirical findings so far and on theoretical approaches to wellbeing, work and retirement, both negative and positive effects of post-retirement work on life satisfaction are plausible. In this paper, we investigate the effects of taking up work again between the ages of 65 and 75 on life satisfaction in different occupational classes in Germany and the United Kingdom. We expect that not only the heterogeneous conditions and experiences of working are crucial for the consequences that post-retirement work has for life satisfaction, but also the institutional arrangements surrounding this form of work. We use data from the German Socio-Economic Panel and the British Household Panel Survey, covering the 1990s and 2000s. Based on fixed-effects regression modelling, we find positive effects of working in both countries, although not all effects are significant. Differentiating by the class of the job in which the older person works, we find mainly positive effects and no significant differences between those who work in a lower-class job and all others. In addition, we find that the positive effect of working on life satisfaction is partly explained by increased satisfaction with household income for those working in a lower-class job in the United Kingdom. We conclude that many of the pessimistic assumptions about people working after pension age cannot be confirmed for our time of observation. However, there are several reasons for believing that the results will be different in the future or for differently defined populations of people working past pension age.