To Work or Not to Work: Factors Affecting Bridge Employment Beyond Retirement, Case of Lithuania

Abstract

This paper investigates bridge employment beyond retirement, as nowadays it is one of solutions often mentioned to stabilize pension systems in the context of an aging population. The aim of this paper is to identify individual, financial, and other factors that influence retirees to work beyond retirement in Lithuania. This research was done using unique administrative Lithuanian data, allowing to analyze post-retirement employment in Lithuania for the first time. The sample consists of 26,000 new old-age pension recipients from 2015 to 2017. By applying binary models of the probability of being employed beyond retirement, it is found out that a greater acquired retirement record, a higher average wage before retirement, and living in a bigger city with a higher employment rate were positively associated with accepting bridge employment, while a higher sickness rate, higher old-age pension, and earlier receipt of an unemployment benefit were inversely related to accepting such employment. Moreover, being a professional or manager increases the likelihood of bridge employment in comparison to unskilled workers. This probability increases even more if a person works in the public sector. Finally, some social groups were excluded, finding that widows with disabilities or widowed women with worse health are not likely to work beyond retirement and are consequently under a bigger risk of poverty. To sum up, retirees who should stay in the labor market in their old age because of their bad financial situation are less likely to do it. This suggests that persons with bigger needs, lower-skilled workers, and women deserve particular attention in labor market reforms.

What drives older adults to continue working after official retirement age?

“…Opposite these two groups stand those who, as stated, retire willinglybe it because they are in good health and wish to turn to other vocations in the coming years, or because they retire willingly due to functional difficulties related to their health. In contrast, the hypothesis is fully corroborated when we compare those who continue to work uninterruptedly with those who retire unwillingly: the likelihood of staying on the job continually after official retirement age is lower among men and higher among Jews, and the chances of continuing to work uninterruptedly are higher among those in better health (Wang et al, 2008;Topa et al, 2014;Virtanen et al, 2014;Dingemans et al, 2016;Hokema and Scherger, 2016;Sewdas et al, 2017;Anxo et al, 2019;Zitikytė, 2019).…”

“…Health is another factor in employment after retirement. Employed people of retirement age tend to report better health, even before retirement, than do full retirees (Wang et al, 2008;Topa et al, 2014;Virtanen et al, 2014;Dingemans et al, 2016;Hokema and Scherger, 2016;Sewdas et al, 2017;Anxo et al, 2019;Zitikytė, 2019). This is true also for unretirement (Cahill et al, 2011;Gonzales and Nowell, 2017).…”

“…By and large, the likelihood of re-employment following an exit due to disability is low. Higher rates of illness, receiving an old-age pension and pre-retirement receipt of unemployment benefits are inversely related to post-retirement employment (Zitikytė, 2019). Indeed, health and labour-market opportunities are connected before retirement and, in turn, influence opportunities after retirement.…”

“…Unless the analysis focuses on specific sectors of the labour market (or includes a comparison with the self-employed; Wahrendorf et al, 2017), employment is defined in general termswhether one is employed, even for very few hours a week or less, or not. For individuals who reach the eligible retirement age already unemployed, after stretches of unemployment, or amid high aggregate unemployment across their work history, the likelihood of bridge employment or unretirement is lower than otherwise (McGann et al, 2016;Zitikytė, 2019). Bridge employees or re-enterers are, on average, workers who retired at relatively younger ages and not due to disability or unemployment.…”

“…Whether measured in occupational status or in education, relatively advantageous careers and better education predict a higher likelihood of unretirement (Pettersson, 2014;Congdon-Hohman, 2018) or post-retirement employment more generally. Relatively advantageous careers (professional career, managerial last job before retirement, high-level or supervisory job, prestigious occupations, and so on) and better education predict a higher likelihood of prolonging employment until official retirement age and beyond; conversely, non-professional blue-collar jobs and elementary occupations predict a lower likelihood of employment beyond retirement (Dingemans et al, 2016;Hokema and Scherger, 2016;Wahrendorf et al, 2017;Oleksiyenko and Życzyńska-Ciołek, 2018;Anxo et al, 2019;Zitikytė, 2019). Individuals employed before retirement in less-advantageous jobspositions that do not include autonomy and/or offer less control of conditions and time, low prestige and high stressare more likely to retire fully (Wang et al, 2008;Pengcharoen and Shultz, 2010;Virtanen et al, 2014;Oleksiyenko and Życzyńska-Ciołek, 2018).…”