The powerful combination of cross-country comparisons and life-history data

Abstract

In this paper we discuss the value of international comparative empirical studies within the broad field of the economics of ageing. We argue the value is particularly great when such comparative research is based on long life-history data on participants, collected using large-scale autobiographical life-history methods. We identify particular aspects of such comparisons that create value relative to other empirical methods and also briefly survey recent key papers to illustrate each aspect. Finally we provide a short new application of this method, using data from SHARE and ELSA, to look at the question of how labour markets for older workers in Europe have been changing across cohorts and the extent to which this has been associated with changing retirement ages in public pension systems.

Introduction

International comparisons are becoming a commonly used empirical method in the economics of ageing, partly because of increasing availability of detailed comparable data from multi-disciplinary longitudinal studies of ageing that have been specifically designed for such purposes. But simply documenting how circumstances differ in old age around the world, whether this is in terms of health, social and family circumstances or economic position, is not particularly useful. Good international comparative research needs to be meaningful enough to inform us about what is driving the evolution of outcomes over the life-course in different countries and why. For example, it needs to show the role of policy variables and institutions, the environment (broadly defined), or life course trajectories more generally, in determining how different types of individual in different countries end up with the late-life outcomes that they do.

This paper argues that international comparisons based on retrospectively collected life-history information can be particularly valuable in this respect. We discuss the relatively recent innovation of large-scale standalone retrospective life-history data collection that has now been added to a number of ageing studies around the world, including the English Longitudinal Study of Ageing (ELSA), the Survey of Health and Retirement in Europe (SHARE). We argue that such life-history data provide a number of advantages. Firstly, researchers using these studies have access to life-course data on more cohorts and hence can exploit more policy variation and policy reforms in their analysis. Second, and related, having complete life-course trajectories ‘observed’ means that researchers can exploit opportunities to link early life exposures to late life outcomes and can carry out trajectory analysis or estimate dynamic panel models with much longer time-series on each individual. Finally, a unique attribute of life-history data is that they cover periods of an individual’s life when they were not in their current household, marriage, or partnership, which can be useful when looking at complex issues surrounding marital selection and sorting.¹

Finally, and most substantively, as an illustration of the potential value of such data we present some simple new analysis using retrospective life-history on labour market trajectories in twelve European countries for all cohorts born between 1920 and 1959. We take two example questions – namely (a) how important are state retirement ages determining late-life work around Europe? and (b) to what extent is the labour market becoming more flexible for older workers? – to motivate our analysis. As a starting point, we are able to easily replicate the previous findings of one of the first and most important international comparisons in the economics of ageing, namely the Gruber and Wise, 1999, Gruber and Wise, 2004 studies that showed, using different countries and a shorter time period, the importance of state pension institutions in determining employment at older ages. We then go on to show the value of having additional data on the entire trajectory of employment at older ages for different cohorts, as opposed to just cross-sectional data or short panel sequences on work as in the Gruber-Wise studies. We show that, once we condition on whether or not the individual is working at age 50, there are to all intents and purposes no differences in the labour market trajectories of men and women, nor in the way that they are affected by public pension retirement ages. We can also go on to measure the total number of years of work supplied after age 50 as an indicator of late-life work and show, for the first time to our knowledge, how this has been evolving across different cohorts in different countries. In an attempt to suggest some preliminary evidence on cohort trends and international differences in labour market flexibility at older ages, we show that the average number of jobs held after age 50 has been rising steadily across cohorts, although the degree to which this has been happening is very different across Europe.

The paper is structured as follows. In the next section we briefly set out the reasons why international comparisons are considered particularly valuable in ageing research and use this framework to show why international comparisons based on life-history data have so much analytical potential. In section three, we highlight some of the methodological background and innovations underlying the design and collection of such life-history questionnaires, and discuss issues around the validation of such data and methods. Section four provides a brief and partial survey of some of the most promising examples of comparative life-history methods, as a way of illustrating the kind of applications that are possible. As pointed out in this section, the majority of these studies are modelling health or wellbeing outcomes as the endpoint, life-history data have not yet been used extensively for labour market research. Consequently, to illustrate the potential value of such a method, in section five we carry out an analysis of the life-history trajectories for employment in two major ageing surveys covering twelve European countries and discuss the findings that emerge. Section six concludes.