Globalization, Uncertainty and Late Careers in Society (Routledge Advances in Sociology)

Globalization, Uncertainty and Late Careers in Society Globalization, Uncertainty and Late Careers is one of a series of books which presents the results of the international and multidisciplinary research program ‘GLOBALIFE – Life Courses in the Globalization Process’. The program was based at the Otto-Friedrich University of Bamberg and at the University of Bielefeld, and ran from 1999–2005, including experts from twelve different countries who studied the implications of the globalization process for individuals in industrialized societies. The research presents a systematic, empirical examination of how global developments impact the life courses of individuals in a broad range of modern societies. Unlike much of the literature on globalization, the GLOBALIFE project findings are not limited to the economic dimension but include a multi-causal intersection of economic, technological, cultural and political changes. Using longitudinal micro-data from a great variety of modern societies, this impressive new collection focuses on the effects of the globalization process on late-career workers and the transition from employment to retirement – a relationship that has up to now mostly been neglected in social science literature on aging and pensions. Often, older employees increasingly have problems in adapting to flexible working environments, fast technological changes and accelerating structural changes on the job markets, in other words late-career employees experience a weakening of their position in the labor market under globalization. The research documented within this book poses several important questions: x x x

Has globalization produced fundamental shifts in late-career workers’ labor market participation and retirement transitions? What transformations in old age career mobility can we observe and how do these transformations differ across various groups of older workers? And how are these transformations filtered by different national institutional settings?

With an impressive array of contributions by country-specific experts, this volume will interest students and academics involved in the study of sociology, welfare and globalization.

Hans-Peter Blossfeld is the director of the GLOBALIFE program and is the Professor and Chair in Comparative Sociology at the Otto-Friedrich-University of Bamberg, Germany. He is Editor of European Sociological Review and Associate Editor of International Sociology. Sandra Buchholz is a Researcher in Sociology at the Otto-Friedrich-University of Bamberg, Germany. Dirk Hofäcker is a Researcher in Sociology at the Otto-Friedrich-University of Bamberg, Germany.

Routledge Advances in Sociology

This series aims to present cutting-edge developments and debates within the field of sociology. It will provide a broad range of case studies and the latest theoretical perspectives, while covering a variety of topics, theories and issues from around the world. It is not confined to any particular school of thought.

1

Virtual Globalization Virtual Spaces / Tourist Spaces Edited by David Holmes

2

The Criminal Spectre in Law, Literature and Aesthetics Peter Hutchings

3

Immigrants and National Identity in Europe Anna Triandafyllidou

4

Constructing Risk and Safety in Technological Practice Edited by Jane Summerton and Boel Berner

5

Europeanisation, National Identities and Migration Changes in boundary constructions between Western and Eastern Europe Willfried Spohn and Anna Triandafyllidou

6

Language, Identity and Conflict A comparative study of language in ethnic conflict in Europe and Eurasia Diarmait Mac Giolla Chríost

7

Immigrant Life in the U.S. Multi-disciplinary perspectives Edited by Donna R. Gabaccia and Colin Wayne Leach

8

Rave Culture and Religion Edited by Graham St. John

9

Creation and Returns of Social Capital A new research program Edited by Henk Flap and Beate Völker

10 Self-Care Embodiment, personal autonomy and the shaping of health consciousness Christopher Ziguras

11 Mechanisms of Cooperation Werner Raub and Jeroen Weesie 12 After the Bell – Educational Success, Public Policy and Family Background Edited by Dalton Conley and Karen Albright 13 Youth Crime and Youth Culture in the Inner City Bill Sanders 14 Emotions and Social Movements Edited by Helena Flam and Debra King 15 Globalization, Uncertainty and Youth in Society Edited by Hans-Peter Blossfeld, Erik Klijzing, Melinda Mills and Karin Kurz 16 Love, Heterosexuality and Society Paul Johnson 17 Agricultural Governance Globalization and the New Politics of Regulation Edited by Vaughan Higgins and Geoffrey Lawrence 18 Challenging Hegemonic Masculinity Richard Howson 19 Social Isolation in Modern Society Roelof Hortulanus, Anja Machielse and Ludwien Meeuwesen 20 Weber and the Persistence of Religion Social Theory, Capitalism and the Sublime Joseph W. H. Lough 21 Globalization, Uncertainty and Late Careers in Society Edited by Hans-Peter Blossfeld, Sandra Buchholz and Dirk Hofäcker

Globalization, Uncertainty and Late Careers in Society

Edited by Hans-Peter Blossfeld, Sandra Buchholz and Dirk Hofäcker

First published 2006 by Routledge 2 Park Square, Milton Park, Abingdon, OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Avenue, New York, NY10016

This edition published in the Taylor & Francis e-Library, 2006. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Routledge is an imprint of the Taylor & Francis Group, an Informa Business

© 2006 Selection and editorial matter Hans-Peter Blossfeld, Sandra Buchholz and Dirk Hofäcker; individual contributors for their contributions All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 10: 0-415-37645-9 (hbk) ISBN 13: 978-0-415-37645-7 (hbk)

Contents

List of tables List of figures List of contributors Preface Foreword

x xiii xv xxii xxv

PART I

Introduction 1

Globalization, accelerating economic change and late careers. A theoretical framework

1

SANDRA BUCHHOLZ, DIRK HOFÄCKER AND HANS-PETER BLOSSFELD

2

Late careers and career exits. An international comparison of trends and institutional background patterns

25

DIRK HOFÄCKER AND ŠTċPÁNKA POLLNEROVÁ

PART II

Country-specific contributions on conservative welfare regimes 3

Men’s late careers and career exits in West Germany

55

SANDRA BUCHHOLZ

4

Labor market exits of older men in the Netherlands. An analysis of survey data 1979–99 KÈNE HENKENS AND MATTHIJS KALMIJN

79

viii

Contents

PART III

Country-specific contributions on Southern European welfare regimes 5

Men’s late careers and career exits in Italy

101

WIEBKE BECKSTETTE, MARIO LUCCHINI AND ANTONIO SCHIZZEROTTO

6

Men’s late careers and career exits in Spain

119

FABRIZIO BERNARDI AND LUIS GARRIDO

PART IV

Country-specific contributions on liberal welfare regimes 7

Late career transitions among men and women in the United States

141

DAVID WARNER AND HEATHER HOFMEISTER

8

Late careers and career exits in Britain

183

KATRIN GOLSCH, DAVID HAARDT AND STEPHEN P. JENKINS

PART V

Country-specific contributions on social-democratic welfare regimes 9

Late careers and career exits in Sweden

211

GABRIELLA SJÖGREN LINDQUIST

10 Late careers and career exits in Norway

235

ARILD AAKVIK, SVEN-ÅGE DAHL AND KJELL VAAGE

11 Late careers and career exits of older Danish workers DIRK HOFÄCKER AND SØREN LETH-SØRENSEN

255

Contents

ix

PART VI

Country-specific contributions on post-socialist welfare regimes 12 Employment exits of older workers in the Czech Republic

281

DANA HAMPLOVÁ AND ŠTċPÁNKA POLLNEROVÁ

13 Late careers and career exits in Estonia

301

KADRI TÄHT AND ELLU SAAR

14 Late careers and career exits in Hungary

323

ERZSÉBET BUKODI AND PÉTER RÓBERT

PART VII

Conclusions and discussion 15 Late careers in a globalizing world. A comparison of changes in twelve modern societies

353

DIRK HOFÄCKER, SANDRA BUCHHOLZ AND HANS-PETER BLOSSFELD

Subject index Author index

373 379

Tables

1.1 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3

4.4

5.1 5.2 5.3 5.4

Institutional contexts and their impact on late careers in the globalization process Participation and employment rates of older workers, men, 1950–2003 Relative cohort change in employment rates between age groups 55–59 years and 60–64 years, 1970–2003 Proportion of part-time employment by sex, age groups 55–59 years and 60–64 years, 1983–2003 Participation and age discrimination in job- and careerrelated training, 1990s Synthesis of results Explanatory variables German men’s labor market mobility after age 55 years (frequencies) Men’s transition to unemployment after age 55 years (logistic regression model) Men’s transition to non-employment after age 55 years (logistic regression model) Men’s transition to unemployment after age 55 years, birth cohort 1929–40 (logistic regression model) Descriptive statistics of variables in the study Results of logit analyses to explain early retirement of older male workers in the period 1979–99 in the Netherlands Results of logit analyses to explain early retirement of married male workers in the period 1979–99 in the Netherlands Results of multinomial logit analyses to explain the chances of becoming unemployed/disabled for work, or early retired of older male workers aged 50–64 years in the Netherlands Employment and unemployment rates by sex and region (in %) Italian men’s labor market mobility after age 45 (in %) Transition to non-employment (piecewise constant exponential models) Demographic indicators

17 29–30 32 37 46 48 65 66 68 70–71 73–74 85 90–91

92–93

94 103 110 112 115

Tables 6.1 6.2 6.3 6.4 7.1 7.2 7.3

7.4 8.1 8.2 8.3 8.4

9.1 9.2 9.3 9.4 10.1

10.2 10.3 10.4 10.5 11.1 11.2 11.3 12.1

xi

Spanish men’s level of education by birth cohort (in %) 121 Changes in the sectoral distribution, occupational structure and macro-economic conditions over time 122 Descriptive statistics for the key independent variables at age 56 years (Spanish men born 1930–40) 127 Spanish men’s exit from employment (piecewise constant exponential model, Hazard ratios) 132–33 Transition in late career by gender in the United States (in %) 154 Job transitions in late career among men and women in the United States, weighted hazard estimates 158–60 Transitions out of the labor force in late career among men and women in the United States, weighted hazard estimates from competing risks models 162–65 Re-entry to the labor force in late career among men and women in the United States, weighted hazard estimates 169–70 Analysis subsample: summary statistics 191 Occupational mobility after age 40 (in %) 195 The probability of transitions from employment and occupational mobility by sex (logistic regression model) 197 The probability of transitions from employment and occupational mobility, controlling for additional characteristics, by sex (logistic regression model) 198–202 Occupational structure in Sweden, 1968–2000 216 Covariates 223 Employees’ number of jobs and re-employment (621 employees) 224 Transition to non-employment after the age of 55 years (Cox proportional hazard models, hazard ratios) 228–29 Observed states at age 65 years for individuals that were employed when they turned age 63 years, by sex and AFP eligibility 244 Marginal effects from multinomial regression, 1932 cohort, males 246 Marginal effects from multinomial regression, 1932 cohort, females 247 Marginal effects from multinomial regression, 1932 cohort, males 249 Marginal effects from multinomial regression, 1932 cohort, females 250 Transitions to inactivity between age 55 years and 67 years of Danish men and women 271–72 Transitions to inactivity, period effects 274 Labor market mobility of Danish men and women age 55–67 years (frequencies) 275 Macroeconomic indicators, 1989–2002 283

xii 12.2 12.3

12.4

12.5

12.6

13.1 13.2 13.3 13.4 14.1 14.2

14.3

14.4

Tables Net replacement rates, pensions awarded in 2001, old and new rules Proportion of working men based on expected counts from logit models with the dependent variable economic status at the week of data collection (separate estimates for different ages) Economic status in the week of data collection (working versus other) for Czech men aged 55–70 years (logistic regression) Proportion of working women based on expected counts from logit models with the dependent variable economic status at the week of data collection (separate estimates for different ages) Economic status in the week of data collection (working versus other) for Czech women aged 53–62 years (logistic regression) Employed persons by economic sector Labor force participation rate of late-career workers, 1959–2000 (in %) Men’s labor market mobility after age 50 years by period (logistic regression model) Exiting employment into unemployment, comparison of different time periods (logistic regression model) Distribution of individuals aged 50–64 years by employment status, 2001 The effect of different attributes on the odds of occupational status mobility between 1988 and 2003, men (logistic regression coefficients) The effect of different attributes on the odds of transition to retirement between 1988 and 2003, men (multinomial logistic regression coefficients) The effect of different attributes on the odds of transition to retirement between 1988 and 2003, women (multinomial logistic regression coefficients)

289

292

293

295

296 303 308 315 318–19 327

341

343–44

345–46

Figures

1.1 1.2

2.1 2.2 2.3 2.4 2.5 2.6

3.1 3.2 3.3 4.1 4.2 4.3 4.4 5.1 5.2 5.3 6.1

Globalization, accelerating economic and social change and late-career transitions Schematic illustration of ideal-typical strategies to adapt the older workforce to structural change and the resulting latecareer mobility patterns Unemployed and inactive as a percentage of population, age 55–59 years, men and women Duration of unemployment, age groups 25–54 years and 55 plus years, both sexes Employment rates vs. implicit tax rates on work, 55–64 years, 1995 Employment rates (1995) vs. OECD EPL Index II (end1990s) Employment rates vs. active labor market policy expenditure as percentage of GDP (1995) Employment rates (1995) vs. participation rates in CET measures (European countries, workers aged 25–54 years, last 4 weeks) Men’s labor force participation rate in age group 60–64 years, 1970–2000 Comparative male unemployment rates, 1978–2000 Men’s transition to non-employment after age 55 years Trends in eligible retirement age and unemployment in the Netherlands Percentage of non-employed men by age and period Proportion of non-employed men aged 55–64 years by education and period Type of non-employment of men aged 55–64 years by year Sectors by region, 1981–2002 Italian men’s transition to non-employment after age 45 years Men’s transition to non-employment by geographical region Employment rates by age for Spanish men, 5-year artificial birth cohorts

5

8 34 35 41 42 44

45 59 60 67 81 87 88 89 104 111 113 129

xiv 6.2 6.3

7.1 8.1 8.2 9.1 9.2 9.3 9.4 9.5 11.1 11.2 12.1 12.2 12.3 12.4 12.5 13.1 13.2 13.3 13.4 14.1 14.2 14.3

14.4 14.5

Figures Survivor function for the exit from employment by education, Spanish men of the 1930–40 birth cohort Survivor function for the exit from employment by employment status, Spanish men of the 1930–40 birth cohort Implied labor force participation rate of men and women aged 50 to 95 years in the United States Self-reported labor force status by age and gender (in %) Transition out of work and back to work (in %) Percent employees aged 16–64 years by industry, 1975–2003 Public sector employment (aged 16–64 years), 1970–2003 Individuals not participating in the labor force, 1978–2003 Unemployment by age, 1975–2003 Transitions to non-employment by cohort Schematic overview of retirement pathways in Denmark Survivor curve for dropping out of the labor market, Danish men (top) and women (bottom) Civilian employment by broad sectors, 1990–2002 Educational attainment by age groups, 2001 Numbers of newly awarded early pensions, 1989–2002 Difference in probability of having a job by age and education between 1995–97 and 1998–2001 (men) Difference in probability of having a job by age and education between 1995–97 and 1998–2001 (women) Labor force participation rate by age, 1989–2002 Pension replacement ratio in Estonia, 1965–99 (% average gross wage) Mobility of late-career men Men’s labor market exit after age 50 years The employment rates for older males (top) and females (bottom) The observed occupational mobility rates for senior males by age and birth cohorts The number of newly awarded early retirement pensions (above) and disability pensions (below) and the observed rates of entry Transitions to early retirement between 1988 and 2003 by age and birth cohort for men (top) and women (bottom) Older men’s (top) and women’s (bottom) transition to disability pensions between 1988 and 2003 by age and birth cohort

130

131 155 193 194 213 214 214 215 225 263 269 284 285 288 294 297 306 307 312 313 326 336

337 338

339

Contributors

Arild Aakvik is an Associate Professor at the Department of Economics, University of Bergen, Norway. His main research interests include social program evaluation, econometrics, early retirement, and health and education economics. He teaches courses on the economics of the welfare state. He has published in journals like Health Economics, Oxford Bulletin of Economics and Statistics, Empirical Economics, and Journal of Econometrics. Address: Department of Economics, University of Bergen, Herman Foss gate 6, N-5007 Bergen, Norway. [e-mail: [email protected]] Wiebke Beckstette served as a student research assistant in the GLOBALIFE project at the Otto-Friedrich-University of Bamberg, Germany, where she wrote her diploma thesis on early retirement processes in Italy. Currently, she is working as a research scientist at the State Institute for Family Research at the University of Bamberg in the interdisciplinary DFG-project “BiKS,” which studies mechanisms of educational decisions especially for the transition from primary to secondary school. Address: Staatsinstitut für Familienforschung an der Universität Bamberg (ifb), Heinrichsdamm 4, D-96047 Bamberg, Germany. [e-mail: [email protected]] Fabrizio Bernardi is an Associate Professor of Social Structure in the Department of Sociology II (Social Structure) of the Universidad Nacional de Educación a Distancia (UNED), Madrid, Spain. His main research interests focus on social inequality, the relationship between family and labor market dynamics but also on quantitative methods for longitudinal analysis. Address: Departamento de Sociología II, U.N.E.D., c/Obispo Trejo s/n, 28040 Madrid, Spain. [e-mail: [email protected]] Hans-Peter Blossfeld is a Professor of Sociology at the Department of Social and Economic Sciences, Otto-Friedrich-University of Bamberg, Germany. He was a Professor of Sociology at the European University in Florence and the Universities in Bremen and Bielefeld. He is editor of the European Sociological Review. He was the Director of the GLOBALIFE project and is

xvi

Contributors

the Director of the “Staatsinstitut für Familienforschung an der Universität Bamberg (ifb)” (State Institute for Family Research at Bamberg University). His research interests include social inequality, youth, family, and educational sociology, labor market research, demography, social stratification and mobility, cross-national comparative research, modern methods of quantitative social research, and statistical methods for longitudinal data analysis. He has published 16 books and over 100 articles. Address: Lehrstuhl für Soziologie I, Otto-Friedrich-Universität Bamberg, Postfach 1549, D-96045 Bamberg, Germany. [e-mail: [email protected]] Sandra Buchholz served as a research scientist in the GLOBALIFE project at the Otto-Friedrich-University of Bamberg, Germany. She is now working in the DFG-project “Flexibility forms at labor market entry and in the early career – a cross-national comparison of the development of social inequality” at the State Institute for Family Research at the University of Bamberg, Germany. Her reserach adresses the influence of increasing labor market flexibility on employment patterns in different career stages. In her dissertation she focuses on labor market entry and exit in East and West Germany. Address: Lehrstuhl für Soziologie I, Otto-Friedrich-Universität Bamberg, Postfach 1549, D-96045 Bamberg, Germany. [e-mail: [email protected]] Erzsébet Bukodi is the Head of the Section of Social Stratification within the Department of Social Statistics of the Hungarian Central Statistical Office, Budapest, Hungary. Her research interests involve educational inequalities and different aspects of life-course analysis. She is a participant of a research project aiming to develop a new social indicator system in Hungary. Recently, she published a book (her PhD dissertation) on marriage timing and educational homogamy of couples. Further publications examine career differences of married couples and the main features of regional and social stratification based on the Hungarian Census data. Address: Hungarian Central Statistical Office, Keleti Károly utca 5-7. 1024. Budapest, Hungary. [e-mail: [email protected]] Svenn-Åge Dahl is the Research Director and Senior Research Fellow at the Institute for Research in Economics and Business Administration (SNF). He is also Research Director for the Research Council of Norway’s Welfare Program. His research and publications concentrate on aspects of social insurance such as early retirement, sickness absence, and vocational rehabilitation. He has for example published in Acta Sociologica, Applied Economics, and European Sociological Review. Address: SNF, Breiviksveien 40, N-5045, Bergen, Norway. [e-mail: [email protected]]

Contributors

xvii

Luis Garrido is a Full Professor and the Director of the Department of Sociology II (Social Structure) of the Universidad Nacional de Educación a Distancia (UNED), Madrid, Spain. His main research interests focus on education, labor market, and family dynamics. In 2005, he has published a book on retirement in Spain, which won the CES (Spanish Economic and Social Council) yearly award. Address: Departamento de Sociología II, U.N.E.D., c/Obispo Trejo s/n, 28040 Madrid, Spain. [e-mail: [email protected]] Katrin Golsch is currently an Assistant Professor at the Faculty of Economics, Business Administration and Social Sciences, University of Cologne, Germany. Previously she was a researcher in the GLOBALIFE project and a lecturer in the Department of Sociology, Bielefeld University, Germany. She received her doctorate in sociology in 2004 about labor market insecurity and its impact on the work and family life of men and women in Germany, Great Britain and Spain. Her core interests include statistical methods for the analysis of survey data and longitudinal data analysis in particular, life-course analysis, social structure, labor market research, and comparative sociological research. Address: The Faculty of Economics, Business Administration and Social Sciences, University of Cologne, Herbert-Lewin-Str. 2, 50931 Cologne, Germany. [e-mail: [email protected]] David Haardt graduated from Johannes Kepler University (Linz, Austria) in 2003 and is now working on his PhD in economics on the dynamics of work and income in later life at the Institute for Social and Economic Research, University of Essex, UK, under the supervision of Professor Stephen P. Jenkins. Currently, he is analyzing the labor market behavior of older men and women in the United Kingdom using hazard regression models. He acknowledges PhD funding from the Austrian Academy of Sciences and the Economic and Social Research Council. Address: Institute for Social and Economic Research (ISER), University of Essex, Colchester, Wivenhoe Park, Colchester, Essex CO4 3SQ, United Kingdom. [e-mail: [email protected]] Dana Hamplová works as a researcher at the Institute of Sociology, Academy of Sciences of the Czech Republic and finished her PhD in Sociology at the Charles University, Prague, Czech Republic. From 2002–04, she worked as a research associate within the GLOBALIFE project at the Otto-FriedrichUniversity of Bamberg, Germany. Her main research interests focus on family and labor market dynamics. Address: Institute of Sociology, Jilska 1, 110 00 Prague 1, Czech Republic. [e-mail: [email protected]]

xviii Contributors Kène Henkens is the Head of the Social Demography Department of the Netherlands Interdisciplinary Demographic Institute (NIDI), an institute of the Dutch Royal Academy of Sciences (KNAW). He is an expert in research on issues regarding the aging labor force. He studied the effectiveness of recent retirement reforms in a national and international perspective. He has conducted large-scale studies among workers and their spouses on the process of retirement and carried out studies among employers on the consequences of an aging workforce, stereotypes toward older workers and labor shortages. He is also an affiliated member of Netspar, the Network for Studies on Pensions, Aging and Retirement. He has a PhD from Utrecht University. Address: NIDI P.O. Box 11650, 2502 AR The Hague, Netherlands. [e-mail: [email protected]] Dirk Hofäcker currently works as an assistant at the Chair of Sociology I at the Otto-Friedrich-University of Bamberg, Germany. He worked as a researcher in the GLOBALIFE project from 2002 to 2005. His main research interests lie in the field of international comparisons, attitude research as well as in quantitative social science data analysis. His work has concentrated on crossnational comparisons of female employment patterns and its institutional backgrounds, and the comparative analyses of retirement processes. Address: Lehrstuhl für Soziologie I, Otto-Friedrich-Universität Bamberg, Postfach 1549, D-96045 Bamberg, Germany. [e-mail: [email protected]] Heather Hofmeister served as the Deputy Director and a Senior Research Fellow of the GLOBALIFE project at the Otto-Friedrich-University of Bamberg, Germany, and is an Assistant Professor. Her current work focuses on families, couples, and gendered occupational and geographical career pathways in international comparison, with a specialization on the United States in recent decades. Address: Lehrstuhl für Soziologie I, Otto-Friedrich-Universität Bamberg, Postfach 1549, D-96045 Bamberg, Germany. [e-mail: [email protected]] Stephen P. Jenkins is a Professor of Economics at the Institute for Social and Economic Research, University of Essex, and Research Professor at DIW Berlin. His current research focuses on poverty, income and labor market dynamics, and applied micro-econometrics, especially survival analysis. He has published numerous journal articles on these topics and was co-editor of The Dynamics of Child Poverty in Industrialised Countries (CUP 2001) and The Distribution of Welfare and Household Production (CUP 1998). Address: Institute for Social and Economic Research (ISER), University of Essex, Wivenhoe Park, Essex CO4 3SQ, United Kingdom. [e-mail: [email protected]]

Contributors

xix

Matthijs Kalmijn is a Professor in the Department of Social and Cultural Sciences, Tilburg University, Netherlands. His research focuses on the sociology of marriage, family, and the life course. Important current research projects are on divorce and separation in the Netherlands and on kinship solidarity in the Netherlands. He is also a member of Netspar, the Network for Studies on Pensions, Aging and Retirement, which was initiated and is coordinated by Lans Bovenberg, Arie Kapteyn, and Theo Nijman. Within this institute, he focuses on the sociological aspects of the later stages in the life course. He has a PhD from the University of California, Los Angeles, USA. Address: Department of Social and Cultural Sciences, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, Netherlands. [e-mail: [email protected]] Mario Lucchini currently is a Research Officer at the Department of Sociology of the Milano-Bicocca University, Italy. He is a member of the ILFI (Italian Longitudinal Household Panel). He is working on longitudinal datasets (ECHP, ILFI), applying event history analysis and neuralnetworks techniques. Among his current research projects are “Transition to Adulthood in Europe,” “Corporate Social Responsibility” and “Fuzzy Approaches to the Measurement of Social Exclusion.” Address: Department of Sociology, Milano-Bicocca University, Via Bicocca degli Arcimboldi, 8, Edificio U7, 20126 Milano, Italy. [e-mail: [email protected]] ŠtČpánka Pollnerová works as a researcher at the Research Institute for Labor and Social Affairs (RILSA), Prague, Czech Republic. From 2003–04 she worked as a research associate within the GLOBALIFE project at the OttoFriedrich-University of Bamberg, Germany. She focuses on social insurance systems, pension policy, and demographic aging. Address: Research Institute for Labor and Social Affairs (RILSA), Palackeho namesti 4, 128 01 Prague 2, Czech Republic. [e-mail: [email protected]] Péter Róbert is an Associate Professor at the Department of Sociology, Faculty of Social Sciences, ELTE University, Budapest, Hungary. He is also a Senior Researcher at the TÁRKI Social Research Center. His research interests include social stratification and mobility with special focus on educational inequalities and life-course analysis. He also does research on lifestyle differentiation and on attitudes toward social inequalities. Recent publications examine career differences of married couples, educational transition from secondary to tertiary school, comparison of students’ performance in stateowned and church-run schools. Address: Faculty of Social Sciences, ELTE University, Pázmány Péter Sétány 1/A. 1112. Budapest, Hungary. [e-mail: [email protected]]

xx

Contributors

Ellu Saar is a Senior Researcher at the Institute for International and Social Studies, Tallinn University, Estonia. Her research areas are social stratification, educational inequalities, life-course analysis. She is a coordinator of the 6th Framework Project “Towards a Lifelong Learning Society in Europe: The Contribution of the Education System.” Address: Institute for International and Social Studies, Tallinn University, Estonia blvd. 7, Tallinn, Estonia. [e-mail: [email protected]] Antonio Schizzerotto is a Professor of Sociology at the Milano-Bicocca University, Italy, and the scientific director of the Italian Household Longitudinal Survey (ILFI). His main interests include research on social mobility, social change and the life cycles, comparative analysis of the transition from school to work as well as research on unemployment and inequalities by gender and generation. Address: Department of Sociology, Milano-Bicocca University, Via Bicocca degli Arcimboldi, 8, Edificio U7, 20126 Milano, Italy. [e-mail: [email protected]] Gabriella Sjögren Lindquist works as a researcher at the Swedish Institute for Social Research, Stockholm University. She focuses on personnel economics. She war born in Stockholm, Sweden, and finished her PhD in Economics at Stockholm University in October 2004. Address: Swedish Institute for Social Research (SOFI), Stockholm University, SE-106 91 Stockholm, Sweden. [e-mail: [email protected]] Søren Leth-Sørensen is a sociologist employed as Senior Adviser in a Research Service Unit at Statistics Denmark. Currently, his office is at the University of Aarhus. His responsibilities include managing projects for outside researchers using data from Statistics Denmark. His main research interests focus on labor market and family changes in Denmark. He has taken part in establishing the so-called IDA-database. This is a longitudinal database for persons, jobs, and firms in Denmark starting in 1980. Address: Forskningsservice, Danmarks Statistik, Forskerfilialen, Århus Universitet Bygning 447, Tåsingegade 1, 8000 Århus C, Tlf. 8942 6810. [e-mail: [email protected]] Kadri Täht works as a doctoral researcher at the Faculty of Social Sciences of the Vrije Universiteit Amsterdam, the Netherlands. In 2004, she worked as a researcher within the GLOBALIFE project at the Otto-Friedrich-University of Bamberg, Germany. Her main research interests focus on social inequality, labor market, and the relationship between labor market and family cohesion. Address: Faculty of Social Sciences, Vrije Universiteit Amsterdam, De Boelelaan 1081, 1081 HV Amsterdam, The Netherlands. [e-mail: [email protected]]

Contributors

xxi

Kjell Vaage is an Associate Professor at the Department of Economics, University of Bergen, Norway. His present research interest includes social insurance economics, applied labor economics, and applied econometrics. On these topics, he has published in economic journals (Scandinavian Journal of Economics, Labour Economics, Applied Economics, etc.) as well as in sociological journals (European Sociological Review, International Journal of Sociology). Address: Department of Economics, University of Bergen, Fosswinkelsg 6, N-5007 Bergen, Norway. [e-mail: [email protected]] David Warner, PhD, is a Postdoctoral Fellow at the Carolina Population Center, University of North Carolina-Chapel Hill, USA. His research interests include the demography of work and retirement, health inequalities, gender and the life course, marriage and marital quality. His current research uses multi-state life tables to understand race, gender, and marital status differences in working life expectancies in the U.S. Address: Carolina Population Center, The University of North CarolinaChapel Hill, 123 West Franklin Street, Chapel Hill, North Carolina 27516, USA. [e-mail: [email protected]]

Preface

This volume is a product of the international and multidisciplinary research project “GLOBALIFE – Life Courses in the Globalization Process,” funded by the Volkswagen Foundation (Hanover, Germany). This project studied the implications of the globalization process for the life courses of individuals in modern societies. In particular, the project examined how globalization impacts four phases of the life course: (1) the transition to adulthood, (2) men’s mid-career mobility, (3) women’s mid-career mobility and the work/family link; and (4) late careers and retirement. There is an edited volume on each of these life phases. This edited book presents the findings of the fourth phase of the GLOBALIFE project. It examines how accelerating changes in the (labor) market, induced by globalization, and the incentives engendered by national pension systems affect the position of older employees in the labor market as well as their rate of exit to early retirement. In a globalizing world, the higher job security and wage levels of late-career employees are often at odds with the faster obsolescence of their skills and competences, the lower profitability of their re-training investments and their lower competitiveness with regard to the better qualified younger generation for newly created jobs. In a period of accelerated global change, companies therefore often view late-career employees as an increasingly expensive and inflexible burden. Employers can (1) either re-train late-career workers and adjust their skills to the new needs of the workplace, which is comparatively costly, or (2) lay them off, which jeopardizes the motivation and trust of mid-career employees in the company, or (3) cut their wages, which is often difficult and de-motivating, or (4) they can try to send them into early retirement – if this option structurally exists in their country. In other words, in a globalizing world older workers increasingly face a more difficult structural labor market position. In particular, in nations with so-called insider-outsider labor markets, where the job security of older workers is particularly high and layoffs as well as wage cuts are hardly possible, the response of the welfare state to accelerated structural change has been the introduction of various early retirement schemes for the older workforce. These measures offer incentives for older employees to leave the workforce earlier and give companies an opportunity to adjust their personnel’s qualification structure through the hiring of a younger generation with modern education. Such early retirement programs

Preface xxiii also help to unburden the labor market in general and to reduce the number of people who are counted as unemployed. However, not all countries have adopted this relatively costly early retirement solution, as will be demonstrated in this book. How late-career employees are affected by globalization varies strongly based on national institutions, such as occupational structures, employment relations, labor market policies, as well as welfare and pension systems, which together systematically filter the globalization forces. A central aim of this volume is therefore to compare the consequences of globalization for older employees across various country contexts of modern societies. The GLOBALIFE project started in 1999 and ended in 2005. It was first located at Bielefeld University, but then moved in September 2002 from Bielefeld to Bamberg, when its director, Hans-Peter Blossfeld was appointed as Professor of Sociology at the Otto-Friedrich-University of Bamberg. During the analyses and the writing of drafts, the project consisted of the following core project members at the University of Bamberg: Hans-Peter Blossfeld, Sandra Buchholz, Daniela Grunow, Dana Hamplová, Steffen Hillmert, Dirk Hofäcker, Heather Hofmeister, Karin Kurz, Detlev Lück, ŠtČpanká Pollnerová, Jan Skopek, and Kadri Täht. We would like to thank all of these colleagues for their superb support and their excellent comments in the weekly GLOBALIFE research seminars. As editors of the book and organizers of the cross-national comparisons, we would also like to thank all the contributors of the country-specific chapters in this volume for their wonderful co-operation and for the enormous effort they put into their analyses and manuscripts. We tried to use comparable data and made a commitment to apply a common research design to the study of effects of globalization on late careers. However, the contributors did not simply carry out a previously designed analysis. As demonstrated by the wealth of information in the country-specific chapters, much of the work in this book represents the creative contributions of our international collaborators. It is also important to note that all of the book chapters were peer-reviewed and revised several times. We also thank Petra Ries and Kathrina Schafhauser for competent administrative project support. In particular, in the stage of preparing the typescript, we received valuable help from our student assistants Monique Antler, Cathrin Conradi, Eva-Maria Goertz, Karin Handke, Wolfgang Kraus, Ilona Relikowski, Monika Schmich, Susanne Stedtfeld, and Dagmar Zanker. We would like to thank all of them for their careful contributions. We especially thank our colleagues Karin Kurz and Heather Hofmeister who gave us helpful advice for preparing the typescript. We have benefited greatly by the work of John Bendix, Sean McCambridge, Molly Knight, and Susan Lang who copy-edited our manuscripts, improved the English of several chapters with great care and gave us one or the other substantive advice. Although these colleagues eliminated some of our errors, only we are responsible for those that remain.

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We would also like to thank the many individuals who responded to our research when it was presented at various international conferences. Our appreciation also goes to Terry Clague and the anonymous Routledge reviewers for supporting the publication of this volume. Finally, we would like to thank the Volkswagen Foundation in Hanover for their financial support that made this ambitious project possible.

Hans-Peter Blossfeld Otto-Friedrich-University of Bamberg

Sandra Buchholz Otto-Friedrich-University of Bamberg

Dirk Hofäcker Otto-Friedrich-University of Bamberg

Foreword

Globalization has increased the uncertainty of late work careers, forcing many older workers to retire earlier than during the Golden Age of full employment prior to 1973. As shorthand for diverse economic changes, “globalization” can be seen as accelerated international economic competition, as restricted space for national public policies, and as ongoing transnational diffusion of labor saving technologies. These economic changes affect the life courses of individuals in their transitions from work to retirement. While globalization has pushed some older workers out of the labor market, it also considerably limits today’s welfare states in providing generous early retirement options. For current reform debates, we need to understand how global economic pressures have affected the late career life course. Why have some countries been more capable of maintaining high employment rates in older age groups, while other countries have excluded them from work and externalized costs on to welfare states? The present study looks at work-retirement transitions for older workers from a life course perspective. Instead of assuming globalization to have similar effects or leading to convergence, this comparative cross-national study takes into account the differential institutional “filters” of welfare state regimes, labor market regulation, and education-qualification profiles, mediating the impact of globalization on the late career life course. The present collaborative study of the impact of globalization on late-career phases is part of the GLOBALIFE Project (“Life Courses in the Globalization Process”), generously funded by the Volkswagen Foundation over the last five years (1999–2004). In previous studies, GLOBALIFE has covered the earlier phases in the work-related life course: the labor market entry phase, the midcareer patterns for men, and the work participation of women during the phase of childrearing. An understanding of these earlier life course phases is not only important in its own right, but also informs our understanding of transitions from work to retirement. Differences in general and vocational education have a longterm impact on an individual’s employment chances and career opportunities. Vocational training systems that focus on early phases often lack appropriate (re-) training thereafter – to the detriment of older workers’ skill profiles. Midlife career patterns such as steep seniority wages, insufficient up-skilling, workrelated health impairments, and unemployment spells are even more closely related to early retirement of men. Finally, increased female labor force participation in the mid-career phase may put more pressure on the labor market

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and may affect the quantitative impact of female (early) retirement. Due to the increased female employment participation, a life course analysis is particularly appropriate to study actual end-career exit patterns. This fourth volume in the GLOBALIFE series presents a comprehensive crossnational analysis of late career transitions from work to retirement and the differential patterns of maintaining active employment of or exclusion from work for the age groups aged 50 and older. Let me sketch an “archaeology” (Mayer 2004) of the comparative and life course analysis of early retirement over the last decades in order to situate the current study and highlight its considerable contribution. The advances made by the GLOBALIFE study can be best understood as standing “on the shoulders” of previous work seeking to grasp the seemingly general phenomenon of ever earlier exit from work. The observation that “older workers are one of the groups whose labor market situation, as unemployment became increasingly structural in its nature, has deteriorated considerably in the last decade” (Casey and Bruche 1983: vii), initiated a study at the Wissenschaftszentrum Berlin (WZB), comparing labor market problems of older workers in Germany, Britain, the Netherlands, Sweden, and the United States. The project looked at early retirement as one of multiple adjustment problems connected to rising mass unemployment since the mid1970s. Others included adjusted working conditions, dismissal protection, working time reduction, long-term unemployment, and re-integrative labor market policies. That analysis reflected the various strategies of trade unions, employers and governments used at the time to cope with structural unemployment: some unions called for working time reduction (most prominently the German metal workers union’s 35-hours-per-week-campaign), others sought to buy out older workers and bring in young unemployed persons (for instance, the German pre-retirement scheme of 1984). During the 1980s, life course analysis advanced to an exciting sociological perspective that had immediate relevance for studying (early) retirement (Mayer 2004). On the one hand, welfare states institutionalized retirement as a final exit from work and as the third phase of the life course. On the other hand, the actual retirement age became increasingly destandardized, as workers would leave employment ever earlier. By the early-1990s, Time for Retirement compared various pathways to early retirement (Kohli et al. 1991), such as flexible old age pensions, disability pensions, special pre-retirement schemes, and long-term unemployment benefits. Although many European countries, including Hungary, and the United States showed a trend toward early exit from work, the publicly financed pathways differed considerably across welfare states. During the 1990s, several specialized comparative studies investigated particular aspects related to early retirement, such as the (mis-) use of disability pensions (the “Dutch disease”) and the active employment strategy of gradual (or partial) retirement (the “Swedish virtue”). Esping-Andersen’s influential Three Worlds of Welfare Capitalism (1990) provoked much comparative research, and it was not unrelated to the early retirement problematic. In his view, Continental “welfare states without work”

Foreword xxvii face an “impasse” of “labor shedding” strategies, such as early retirement, to alleviate labor market pressures (Esping-Andersen 1996). Similarly, Fritz Scharpf criticized the “Continental dilemma”: the vicious circle of passive labor market policies that increases social labor costs and thereby unemployment rates even further (Scharpf 1998). His international comparative project on Work and Welfare in the Open Economy at the Max Planck Institute in Cologne explored the capability of welfare states to adapt to globalization (Scharpf and Schmidt 2000), including a study on reversing early retirement policies (Ebbinghaus 2000). These comparative welfare state analyses showed the importance of understanding the different macro-regime constellations and the difficulties of changing policies given institutional path dependency and political veto points. In contrast to macro-level studies, economists took macro-configurations as given and asked to what degree social protection would provide a “pull” towards early exit from work for older workers. A special study for the OECD (Blöndal and Scarpetta 1998) became the influential starting point for economic analyses of the disincentives to work provided by welfare states. A comparative international study used benefit simulations to show the incentive effects of current public old age pension schemes (Gruber and Wise 1999), although it excluded other pathways such as disability pensions and unemployment benefits. Yet employers may have fostered early retirement through private occupational pensions or golden handshakes. Many economic studies seem biased in looking mainly at the labor supply side, the “pull” incentives of welfare programs, while they ought to also take into account the demand side, the “push” factors, such as the interest of firms in shedding older workers. That early exit from work results at least partly from economic “push,” was a convincing new perspective in the comparative project under the direction of the late Frieder Naschold at the WZB investigating the externalization or internalization strategies of firms across Europe, Japan, and the United States (Naschold and de Vroom 1994). Some companies use early retirement as a strategy to restructure, keeping younger workers with new skills and shedding older workers with outdated skills in a socially accepted way. In Sweden and Japan, companies use more internalization strategies to maintain these workers in the firm or re-employ them after their mandatory retirement from career jobs. More broadly, the Varieties of Capitalism (Hall and Soskice 2001) approach draws attention to the differences between Anglo-Saxon “free” versus Rhenish “social” market economies, or liberal uncoordinated versus non-liberal coordinated market economies. Recent research in political economy has explored the institutional complementarities and elective affinities between welfare regimes, production systems, and labor relations (Ebbinghaus and Manow 2001). In order to explain variations in early exit from work, one should apply a more integrative macro-sociological perspective to look at the “pull” of different welfare regimes and the “push” of different economic systems as well as the mediating role of the social partners (Ebbinghaus 2006). The comparative studies reviewed thus far have largely used macrocomparative analysis to study “pull” and “push” factors on early exit from work

xxviii Foreword patterns. Even micro-economic analyses use pension benefit rules set nationally to simulate micro-level incentive effects. Besides individual national studies, truly comparative projects with micro-level analysis of early retirement decisions are rare, partly due to the problems of availability and comparability of survey and panel data. The GLOBALIFE project is a welcome endeavor empirically to study the impact of cross-national regime variations across welfare states and employment systems with the help of national micro-level data that allow longitudinal analysis. Just recently, a comparable micro-level database for older working and non-working people was launched in Europe with the SHAREProject (Börsch-Supan et al. 2005), allowing comparisons utilizing similar data in Britain and the Unites States. Interestingly, many of the mentioned international research projects have been initiated or coordinated at German research institutions. Given the long record of using early exit from work in response to labor market problems since the mid1970s, the societal and political debate in Germany (and in many other neighboring European countries) has naturally also affected the research agenda and funding decisions. Although the impetus may have been to understand national developments, from the very start these research projects were international in comparing experiences in other European countries and abroad, and collaborating with many non-German academics. This holds also for the GLOBALIFE project, thanks to the considerable coordinating skills of HansPeter Blossfeld at the Otto-Friedrich-University of Bamberg. The GLOBALIFE project has brought together a truly international team of collaborators to cover developments in eleven European countries and the United States. Compared to many previous studies concentrating only on socialdemocratic, conservative and liberal welfare state regimes, the GLOBALIFE scope of countries extends to include the post-socialist regimes of Eastern Europe. This is of particular significance, because no other area in Europe has gone through such dramatic exposure to globalization in the 1990s, with older workers forced out of work, especially in Central Eastern Europe (less so in the Baltic countries). Each national GLOBALIFE study provides an in-depth analysis of late career employment patterns and work to retirement transitions, based on the analysis of national micro-level data. These collected studies provide the most comprehensive analysis to date of individual work to retirement transitions in a life course perspective, enabling the comparison of different cohorts across time. Given the data upon which such retrospective cohort analyses rely, the findings concern past and current cohorts of retirees. Thus, in order to study the impact of current and future reforms, further studies will be needed in the years to come. For such endeavors, the GLOBALIFE project provides an impressive model of how to combine macro-comparative and micro-level analyses of the life course to illuminate social change. Bernhard Ebbinghaus Mannheim Center for European Social Research, University of Mannheim, Germany

Foreword xxix BIBLIOGRAPHY Blöndal, S. and Scarpetta, S. (1998) ‘The Retirement Decision in OECD Countries’, OECD Economic Working Papers, 202. Börsch-Supan, A., Brugiavini, A., Jürgens, H., Mackenbach, J., Siegrist, J. and Weber, G. (2005) Health, Ageing and Retirement in Europe – First Results from the Survey of Health, Ageing and Retirement in Europe, Mannheim: mea. Casey, B. and Bruche, G. (1983) Work or Retirement? Labor Market and Social Policy for Older Workers in France, Great Britain, the Netherlands, Sweden and the USA, Aldershot: Gower. Ebbinghaus, B. (2000) ‘Any Way out of “Exit from Work”? Reversing the Entrenched Pathways of Early Retirement’, in F.W. Scharpf and V. Schmidt (eds) Welfare and Work in the Open Economy. Vol. II, Oxford: Oxford University Press, 511–33. Ebbinghaus, B. (2006) Reforming Early Retirement in Europe, Japan and the USA, Oxford: Oxford University Press (forthcoming). Ebbinghaus, B. and Manow, P. (2001) Comparing Welfare Capitalism: Social Policy and Political Economy in Europe, Japan and the USA, London: Routledge. Esping-Andersen, G. (1990) Three Worlds of Welfare Capitalism, Princeton, NJ: Princeton University Press. Esping-Andersen, G. (1996) ‘Welfare States without Work: The Impasse of Labour Shedding and Familialism in Continental European Social Policy’, in G. Esping-Andersen (ed.) Welfare States in Transition: National Adaptations in Global Economies, London: Sage, 66–87. Gruber, J. and Wise, D.A. (1999) Social Security and Retirement around the World, Chicago, IL: University of Chicago Press. Hall, P.A. and Soskice, D. (2001) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, New York, NY: Oxford University Press. Kohli, M., Rein, M., Guillemard, A.-M. and van Gunsteren, H. (1991) Time for Retirement: Comparative Studies on Early Exit from the Labor Force, New York, NY: Cambridge University Press. Mayer, K.U. (2004) ‘Life Courses and Life Chances in a Comparative Perspective’, MZES Mannheimer Vorträge, 26. Naschold, F. and de Vroom, B. (1994) Regulating Employment and Welfare: Company and National Policies of Labour Force Participation at the End of Worklife in Industrial Countries, Berlin: W. de Gruyter. Scharpf, F.W. (2001) ‘Employment and the Welfare State: A Continental Dilemma’, in B. Ebbinghaus and P. Manow (eds) Comparing Welfare Capitalism, London: Routledge, 270–283. Scharpf, F.W. and Schmidt, V. (2000) Welfare and Work in the Open Economy. 2 vols, Oxford: Oxford University Press.

1 Globalization, accelerating economic change and late careers A theoretical framework Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld

INTRODUCTION Globalization has powerfully shaped both national economies and individual life courses in modern societies during the last two decades (Blossfeld et al. 2005; Blossfeld, Mills, and Bernardi 2006; Blossfeld and Hofmeister 2006). The growing flows of capital, commodities, services, labor, and information across national borders have intensified the exchange between people from countries with quite different productivity levels, wage structures, social standards, work cultures, and investment opportunities – in particular after the fall of the Iron Curtain. The emergence of a single worldwide market has therefore enhanced the number of competitors – with the effect that a larger market spawns more international specialization of labor and more rapidly transforms older industries and occupational structures and brings new ones into being. Furthermore, the competition between more heterogeneous market participants and companies working under different production conditions has increased, which in turn has raised the likelihood of market turbulences, the volatility of market developments, and the rate of technological progress in the economy. In addition, the increasing mobility of production factors across national borders, in particular financial capital, has led to a rising tax competition among welfare states and to a greater effort of governments to deregulate, privatize, and liberalize their national economies. The importance of the market as a coordinating principle appears to increase with actors competing on a larger and intensified scale. Acceleration and rising uncertainty of social and economic processes in open economies have been reinforced by the constant improvement of modern information and communication technologies, which allow individuals to connect faster around the globe. Thus, important scientific discoveries and technological advances, including new and better materials and improved methods of production as well as consumer fashions and product innovations, are diffusing much faster throughout the interconnected world. The increasing integration of the world’s economic community also creates unprecedented interdependences and therefore reinforces the exposure of local markets to random external shocks (such as major political and economic crises,

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technological inventions, wars, terrorist attacks, etc.) occurring someplace on the globe. In other words, global markets are not only more dynamic and are pushing technological advances in an extraordinary manner, but they have also turned out to be less predictable and more risky. The increasing acceleration of technological innovation and rising uncertainty of the social and economic environment of firms require companies to respond faster to these changes (Castells 2000; Mills and Blossfeld 2003). In other words, there is a rising need for a more flexible work organization in most firms and for higher investments in employee training and development. Workers’ vocational, technical, and professional skills need to be able to adapt quickly to technological advances in the workplace and to newly created job positions. Even if we see increasingly powerful effects of globalization, the nation state usually remains the decisive force in determining the economic condition of its citizens (Mills and Blossfeld 2005). National labor markets are an important reality, and pension systems differ to a large extent among countries. A central aim in this volume is therefore to compare the consequences of globalization for older employees across various country contexts. The impact of globalization on the employment patterns of men and women in modern societies has been studied by the GLOBALIFE project for young people entering the labor market (Blossfeld et al. 2005) as well as for the job trajectories of mid-career men (Blossfeld, Mills, and Bernardi 2006) and mid-life women (Blossfeld and Hofmeister 2006). In this book, we address the question of how accelerating changes in the (labor) market, induced by globalization, and the incentives engendered by national pension systems affect the position of older employees in the labor market as well as their rate of exit to early retirement. Only a few studies have paid attention to the effects of globalization on older workers, and most of these studies focused on how globalization affects the sustainability of welfare states or the financing of pension systems in rapidly aging populations. An elaborate empirical comparison of the consequences of accelerated economic change and the filtering of this change by country-specific institutions for late-career employees is lacking. Fast changes in technology and work affect the relative numbers of workers in different jobs, occupations, and industries and call for corresponding changes in the re-training and movement of current workers and the allocation of young entrants and other persons seeking employment. In this adjustment process, older workers increasingly face a more difficult structural labor market position for a number of reasons. First, older employees, in particular the more qualified ones, have a lower likelihood to change firms than younger workers in all modern societies. This is because the security of employment within an organization often increases with seniority. Even though long-term employment security is usually not guaranteed by law or contract in most countries (exceptions are the civil servants in Germany, for example), it has been often embedded in the human resource planning policies of internal labor markets in larger firms. For older employees, it also becomes harder to find a job with another company that will replace the wages and fringe benefits often achieved after years of service

Globalization, accelerating economic change and late careers

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and internal promotion. Thus, voluntary job moves across firms generally decrease with age. Second, based on promotion and seniority rules, late-career employees often enjoy higher wages than younger employees, even if this wage differential is not necessarily justified by a higher productivity, making latecareer employees often more expensive than their younger competitors. Third, based on the acceleration of technological and organizational change, the skills and labor force experiences of older workers – who were often trained for more traditional occupations – get outdated more quickly, so that their comparative advantage in terms of work experience declines more rapidly in globalizing societies. Fourth, the period of future returns-to-investments in on-the-job training and re-training is typically much shorter for older workers than for their younger counterparts. Consequently, employers’ incentives for these investments often decrease strongly with the age of employees. This makes it also harder for older unemployed workers to get jobs requiring longer periods of on-the-job training. Instead, their re-entry opportunities are often limited to those jobs where the demanded skills are easily acquired and where wages are usually lower. Finally, younger workers with a recent education are often more suitable for many of the newly created jobs in the knowledge economy – and as long as young job seekers have difficulties establishing themselves in a tight labor market (see Blossfeld et al. 2005), these young people will be less expensive alternatives. In sum, in a globalizing world, the higher job security and wage levels of latecareer employees are often at odds with the faster obsolescence of their skills and competences, the lower profitability of their re-training investments and their lower competitiveness with regard to the better qualified younger generation for newly created jobs. In a period of accelerated economic change, companies therefore view late-career employees as an increasingly expensive and inflexible burden. Employers can (1) either re-train late-career workers and adjust their skills to the new needs of the workplace, which is comparatively costly, or (2) lay them off, which jeopardizes the motivation and trust of mid-career employees in the company, or (3) cut their wages, which is often difficult and demotivating, or (4) they can try to send them into early retirement – if this option structurally exists in their country. In particular, in nations with so-called insideroutsider labor markets, where the job security of older workers is particularly high and layoffs as well as wage cuts are hardly possible, the response of the welfare state to accelerated structural change has been the introduction of various early retirement schemes for the older workforce. These measures offer incentives for older employees to leave the workforce earlier and give companies an opportunity to adjust their personnel’s qualification structure through the hiring of a younger generation with modern education. Such early retirement programs also help to unburden the labor market in general and to reduce the number of people who are counted as unemployed. However, not all countries have adopted this relatively costly early retirement solution, as will be demonstrated in this book. How late-career employees are affected by globalization varies strongly based on national institutions (Mills and Blossfeld

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2003), such as occupational structures, employment relations, labor market policies, as well as welfare and pension systems, which together systematically filter the globalization forces. Our comparative analysis in this book includes twelve countries from five welfare and labor market regimes. The United States and Great Britain represent the liberal regime, while Germany and the Netherlands exemplify the conservative one. Denmark, Norway, and Sweden count as social-democratic regimes, while Italy and Spain embody the Southern European regime. The “post-socialistic” regimes in our study are the Czech Republic, Estonia, and Hungary. This introductory chapter discusses how globalization may have affected older workers in different regime types and thereby provides a comparative theoretical framework for the following twelve country studies and their comparison in the final chapter of this volume. We first describe how OECD economies and their labor markets have changed due to globalization and then explain how global forces affect late-career employees’ labor market position and retirement behavior. Subsequently, we develop different ideal-typical strategies for how various societies adapt an older workforce to the accelerating structural change in a globalizing world. In particular, we address the importance of national institutions such as pension systems, production regimes, occupational structures, and employment-sustaining policies in filtering the effects of globalization on late careers. Based on these institutional considerations, we present both a regime classification and hypotheses for an international comparison of late careers before we identify specific individual characteristics affecting the labor force participation of older employees. We conclude with a brief summary of the key hypotheses, a short description of the data and methods employed, and an overview of the structure of the book.

GLOBALIZATION AND ITS IMPACT ON LATE-CAREER WORKERS It is a general perception that in recent years, the world has been changing more rapidly than ever before and that it is likely to keep changing at this accelerating pace in future years (Tanzi 2000). Globalization is the key idea by which the media, policy makers, and academics explain this acceleration of social and economic processes in the recent past (Waters 2001). As outlined by Mills and Blossfeld (2003), globalization can be characterized by four interrelated structural shifts that have transformed the life courses in modern societies during the last two decades (see Figure 1.1). First, there is the rapid blurring of national borders and the subsequent internationalization of financial, product, and labor markets, especially after the breakdown of the East–West divide. This development has intensified the exchange among people from countries with different production conditions and has stimulated a new international division of labor, which rapidly has transformed older industries and occupational structures and brought new ones

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GLOBALIZATION

Internationalization of markets

Intensification of competition based on deregulation, privatization, liberalization

Increasing division of labor among societies, intensification of innovation, transformation of old industries and occupations, creation of new ones

Spread of global networks and knowledge via new ICTs

Rising dependence of local markets on global shocks occurring randomly

Accelerating market transactions

Increasing volatility of market development

Increasing uncertainty and accelerating rate of social and economic change Greater need for swift adaptation

INSTITUTIONAL FILTERS Institutions adapting an older workforce to structural change Pension and welfare systems Promoting/hindering employment exit

Employment relations systems

Occupational systems

Employmentsustaining policies

Promoting/hindering employment continuation

MICRO LEVEL Late-career mobility pathways: employment maintenance versus employment exit Figure 1.1

Globalization, accelerating economic and social change and late-career transitions (own illustration following Mills and Blossfeld 2005)

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into being. The second shift has been the intensification of competition generated from privatization, deregulation, and liberalization within the nation states. In an era when capital increasingly crosses national borders, nation states are forced to compete with each other for foreign direct investments. This often happens on the basis of tax competition and the creation of more attractive investment conditions through privatization, deregulation, and liberalization. The third development is the constant advancement of modern information and communication technologies, which allows people to form global networks, to connect swiftly around the world, and to create an instant common worldwide standard of comparison. Modern ICTs have therefore fundamentally changed the scope, intensity, velocity, and impact of social and economic transformations. Finally, globalization produces a mutual dependence on the world, which makes local markets increasingly vulnerable to random shocks (such as major political and economic crises, technological inventions, wars, terrorist attacks, etc.) occurring someplace on the globe. Altogether, these four mechanisms of globalization have produced unprecedented accelerated social and economic change and have increased the level of market uncertainty over the last two decades (Castells 2000). Public and private organizations are forced to adjust to these changes in their environment and to use more flexible forms of production and distribution organization as well as new management strategies (Castells 2000; Piore and Sabel 1984). The most prominent recent examples of more flexible forms of labor organization are outsourcing, which many companies have used as a strategy to shift their production to other countries; lean management, the desire of many firms to reduce the number of levels in the management hierarchy and the number of middle managers; and lean production to simplify work procedures and speed up the whole production process. In OECD countries, the chief investment in plants and equipment since the late-1980s was directed into information technology, such as computers and telecommunications equipment (Castells 2000). As a consequence, the reorganization of labor has been characterized by more extensive networking, both within and between (multi-national) enterprises (Castells 2000; Piore and Sabel 1984). New information and communication technologies have also entailed considerable shifts in the production processes. In particular, automation and computer programmable machinery have set the conditions for a shift from large-scale standardized goods to flexible specialization and differentiated quality (Soskice 1999). Of course, these developments affect late-career employees and their position on the labor market. First, we expect that both unskilled and skilled older workers find it increasingly difficult to adapt to the technological changes associated with the knowledge-based global economy. The increasing use of automated machinery places new demands on both the technical skills and the intellectual aptitudes of production workers. We therefore expect that unskilled workers in plants will be more quickly replaced by smaller numbers of higher qualified workers operating sophisticated computer-controlled equipment. We also expect that late-career

Globalization, accelerating economic change and late careers

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employees who were trained for skilled work in industry and trade will have difficulties, because their manual skills and job qualifications are becoming quickly obsolete by these technological advancements. The new knowledgebased work in globalizing societies is generally dependent on research and development and puts a premium on product innovation speed. Firms’ rising factory automation often also means a re-definition of whole work processes and, connected to this, a stronger need for more theoretically qualified employees. Thus, as the routine manual work associated with industrial manufacturing increasingly declines, there is a rising demand for more autonomous, theoretically qualified, and intrinsically motivated workers (Castells 2000). However, employers’ willingness to invest in re-training older vocationally trained employees or to equip them with the skills needed for the new jobs will likely decrease with age, because older workers have a higher likelihood to leave the firm sooner than their younger counterparts. In addition, young people often have the modern theoretical qualifications and are still relatively inexpensive in modern globalized societies (Blossfeld et al. 2005). Second, globalization seems to encourage a dual shift in the production process of modern societies. On the one hand, faster technological advancement and the rise in automation make it possible to increase the output from a shrinking labor force. In this process, traditional occupational structures are rapidly transformed, which makes many of the older jobs superfluous (Castells 2000). On the other hand, shifting production to countries where production costs are lower and labor is cheaper moves jobs from highly industrialized countries to less-developed ones. The accelerated global division of work has sometimes affected even whole industries (mining, steel, ship building, and textiles, for example) and the jobs related to them. Since the share of older employees in these obsolete industries is higher than in more modern ones (see Blöndal and Scarpetta 1998), late-career employees will be particularly affected by the decline of these obsolete economic sectors. In sum, we expect that in a globalized market, more firms will have to lay off workers to stay competitive – and older workers who often have relatively high seniority wages and obsolete skills and occupations may most likely be affected by this development. Third, the higher productivity growth in the industrial sector than in the service sector will lead to increasing competition among workers seeking jobs in the service sector. However, work in the service sector is highly diverse, from cleaning workers to business consultants, from truck drivers to financiers, from fast-food workers to waiters in first-class hotels, from kindergarten teachers to university professors, from nurses to medical doctors, and from street sweepers and garbage collectors to heads of administrations. Again, we expect that young workers have a better chance to get the more attractive semi-professional and professional service positions, because they are generally better educated than their older competitors and more often hold the necessary college and university certificates for modern service jobs. In contrast, older workers with obsolete manual qualifications will be rather constrained to those service jobs with lower status, poorer working conditions, and lower pay.

8

Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld

Fourth, in many countries older employees have a socially acknowledged alternative role outside the labor market, namely as pensioners. Thus, early retirement programs in some countries represent a policy response to cope with increasing labor market problems and rising unemployment of older workers. However, while this strategy of sending older employees into retirement might appear to be a costly but appropriate measure to ensure “social peace,” it might even encourage employers to discriminate (through mass layoffs) against older workers precisely because the alternative role of the pensioner is available.

STRATEGIES TO ADAPT THE QUALIFICATION STRUCTURE OF THE WORKFORCE TO ACCELERATING STRUCTURAL CHANGE There are two opposite ideal-typical strategies to adjust the qualification structure of the workforce to the demand of accelerated structural change (see Figure 1.2). One basic model is to retire older employees with their obsolete skills earlier (employment exit) and to hire young people with modern education. The implication of this model means a shorter working life for older employees. Of course, this model only works if there is a sufficient number of qualified young people available to replace them. This is still the case in most modern societies (see Blossfeld et al. 2005). The alternative is to rely on the further qualification and re-training of older workers, so that they are able to successfully adapt to the changing demands of workplaces and the emergence of new jobs (employment maintenance). Although there is a complex coexistence of employment exit and employment maintenance strategies in every modern country, we hypothesize that the logic of

Keep the older workforce

Shed the older workforce

>

Employment maintenance

Employment exit

Late-career mobility patterns: late-career job mobility, late-career employment mobility Figure 1.2

early retirement; transitions into welfare state subsystems

Schematic illustration of ideal-typical strategies to adapt the older workforce to structural change and the resulting late-career mobility patterns

Globalization, accelerating economic change and late careers

9

historically grown configurations of national institutions systematically suggests the adoption of one of the two strategies. But before we develop this argument, we first discuss the two strategies in more detail. Strategy 1: employment exit based on early retirement Many Western industrialized countries have responded to accelerating economic change by offering older employees incentives to leave the labor market early. One of the most common policies has been to provide early retirement programs. In various countries, welfare programs, such as unemployment or invalidity insurance benefits, serve the same function (see Guillemard 1991). Early retirement schemes allow for shedding older employees from the labor market before they reach the mandatory retirement age. The programs offer older workers only slightly reduced pension benefits compared with the benefits they would receive if they continued working and retired at mandatory retirement age. Although early retirement programs are quite expensive, they seem to be advantageous for all relevant actors who face the consequences of accelerated structural change in the labor market. Employers can use them as a relatively cheap individual strategy to adjust their workforce to a quickly changing environment (Blossfeld and Stockmann 1998/99). Due to the comparatively high level of early retirement pensions in many countries, older employees often perceive them as a means to gain more leisure time while maintaining the same standard of living. In addition, the steady receipt of benefit payments guarantees early-retired financial security in an increasingly uncertain economic world. Finally, nation states also may have an interest in implementing early retirement schemes, because they provide an effective instrument for national economies to keep the qualification structure of the workforce competitive and to offer incentives for companies to keep their production within the country. Furthermore, early retirement schemes that encourage older workers to leave the labor force early (and offer younger workers the chance to find jobs in the labor market) provide an effective means to lower the unemployment rate of a nation. This is particularly the case in those countries where the structural unemployment rate (long-term unemployment) is high. Early retirement may therefore indirectly help to safeguard jobs and to protect a society from the adverse effects of high unemployment rates. It is therefore not surprising that early retirement options have become widespread, especially in countries with rigid insider-outsider labor markets in Central and Southern Europe as well as in countries with unprecedented structural change, such as in post-socialist transition countries (see Hofäcker and Pollnerová, this volume). Strategy 2: maintaining an older workforce in the labor market Countries that are ideologically less prone to state intervention, such as the United States or the United Kingdom, and countries which have a long history in

10 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld actively supporting employment attachment of men and women throughout the life course, such as the Scandinavian countries, are less keen on using early retirement as a means to adjust the qualification structure of the workforce to the accelerated structural change of job positions (OECD 1995, 1998). Instead, these societies maintain the older workforce in the labor market and re-train them. Two different maintenance strategies have to be distinguished. First, the nation state might rely on the mechanism of a flexible, unregulated labor market to allocate (older) employees to new jobs. We call this strategy “market-induced maintenance.” It has been used in countries such as the United States in past decades. Though this strategy has been comparatively successful in terms of higher economic activity rates of older age groups, it may not be supported unanimously by all of the labor market actors. On the one hand, employers often favor this system, because it allows them to react flexibly to economic changes, and it keeps the wages of older employees low. On the other hand, companies have to spend an increasingly significant amount of their resources on re-training programs for older workers. Policymakers often favor this policy, because flexible labor markets and company re-training usually keep down the extent and rigidity of unemployment and reduce the overall burden of welfare support. The higher activity rate of older people also increases tax revenue. However, such advantages come at the cost of a higher job mobility rate and a lower wage, job quality, and prestige for older employees. In addition, due to the fact that public pension schemes in these countries usually only partly compensate for the level of wages earned, some groups of employees have to continue to work for financial reasons after receiving a pension. Second, there is the public-induced maintenance strategy of Scandinavian countries. In this approach, older workers are enabled by firms or the state to adjust to the changes in their workplace, to take over new jobs, or to obtain new employment through advanced training and refresher courses. These (re-) training measures may therefore take place either within a firm, as a form of continuing on-the-job training, or they may be state-sponsored efforts aimed at workers who have lost their jobs and are actively searching for new ones. Keeping (older) workers employed is the aim of this social-democratic policy; long-term unemployment or early retirement is ideologically not accepted. Rather unemployment is considered as an opportunity to adapt individual qualification profiles to the new needs of the changing labor market. Such lifelong (re-) training ideology can be expected to ensure older workers’ adaptability and employment continuity as well as their re-entry chances after job loss. The idea is that (re-) trained older employees with long work experience may actually be attractive to employers, as this approach provides continuity if not institutional memory, reduces the search costs and lost time in training new workers, and avoids potential difficulties (such as court cases about age discrimination) if older workers were dismissed. The added benefit for employees is that they remain useful and have the opportunity to earn higher pensions.

Globalization, accelerating economic change and late careers

11

Adapting strategies and mobility patterns For our longitudinal study, the distinction between employment exit and employment maintenance strategies is of empirical importance. Depending on the kind of strategy used, late-career mobility patterns are expected to differ strongly by country in the age of globalization (see Figure 1.2). In employment maintenance regimes, we expect that globalization intensifies job turbulence and late-career mobility across time and cohorts. This means we anticipate older employees to be increasingly mobile both between and within firms. We also anticipate, especially in market-induced maintenance regimes, a destabilization of late careers in the sense of increasing job losses, more short-term unemployment spells, and more re-entries into employment. On the other hand, in employment exit regimes, we expect that globalization will push older employees increasingly out of the labor market early. Thus, when we compare late careers across time and cohorts, we expect to observe fewer job-to-jobmoves, less re-entries from unemployment into employment, but more transitions from employment to long-term unemployment and an increasing rate of early retirement (or to any of the functionally equivalent welfare programs, such as receiving invalidity insurance benefits). Employment maintenance and employment exit policies can be considered as the ideal-typical extreme points on a continuum. Modern societies are complex economies and will never completely adopt only one or the other extreme strategy. However, the extent to which employers and the state in a particular society use employment exit measures instead of measures of maintaining the older workforce, depends on how far nation-specific institutional structures foster one over the other alternative. Such structures will also influence whether late-career workers will be more or less likely to retire early or be mobile within the firm or in the labor market.

GLOBALIZATION, LATE CAREERS AND INSTITUTIONAL FILTERS Though we have argued that globalization is expected to affect the mobility patterns of older employees, we do not assume that such influences will be homogeneous across all countries or that we will find a convergence of late employment trajectories across all modern societies. Instead, we expect that national institutional settings will have a mediating effect on how an older labor force is adjusted to structural change, and in this way, will indirectly affect patterns of labor force mobility and employment exit. Country-specific institutions and historically grown social structures determine how late careers are re-shaped under globalization. As Mills and Blossfeld (2003) have argued, institutions and social structures have a certain inertial tendency to persist (Esping-Andersen 1993) and act as an intervening variable between global macro forces and the responses of individual actors on the micro level (Regini 2000; Mayer 2004). But when we consider institutional structures as filters of global

12 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld processes on late-career workers, neither a pure welfare state perspective (on pull effects) nor a pure labor market perspective (on push effects) is sufficient. An appropriate approach to cross-national differences has to rely on both systems (DiPrete et al. l997): (1) the pension systems or more general welfare arrangements, which promote or hinder the exit from employment (pull effect) and (2) institutions, which promote or hinder the continuation of employment of late-career workers (push effect) including occupational structures, employment relations systems, and employment-sustaining policies (see Figure 1.1). Pension systems and welfare arrangements In times of accelerating structural change in the economy and rising labor market pressure, public policy may introduce incentives, which reward or penalize employers (and older workers) keeping an older workforce employed. Early retirement schemes play a central role here, as they provide both opportunities and financial incentives for employment exits before the legal retirement age. The recent decrease in old age employment in many Western industrialized countries can be attributed to a large extent to such early retirement options and incentives (Blöndal and Scarpetta 1998; Gruber and Wise 1998). Therefore, in the analysis of country-specific late career pathways, primary attention needs to be paid to the various characteristics of contemporary national pension schemes. First, the minimum number of years required to qualify for a public pension needs special attention, since it has a strong effect on the actual use of employment exit options, particularly on early retirement. Second, the cumulated duration of previous pension contributions may play a central role in systems where the pension benefit is highly contribution-based. In these countries, the incentive to remain in the labor force will be relatively high unless early retirement is compensated for by a strong non-actuarial formula. On the other hand, there are also penalties for work beyond retirement age in some countries. Third, the generosity of benefits has an important effect as well. For example, if both the level of pensions in general as well as the compensation level of early retirement benefits are comparatively generous and allow for a decent standard of living in old age, urging older employees to withdraw earlier from work constitutes a socially acceptable strategy to relieve the labor market. However, in less generous systems where (early) pension benefits are low, older individuals are forced to remain in the labor market for years to make ends meet. This prolongs the work life, often beyond official retirement and often forces shifts to low-paid, part-time, or temporary jobs, or even to work in the informal economy. Empirically, Central and Southern European countries have high levels of wage replacement through public pensions and attractive early retirement schemes. Such countries appear to follow a policy of encouraging early retirement, which is a reasonable strategy against the background of industrial or still heavily agricultural economies whose rigid labor markets were characterized by high levels of employment protection and restricted opportunities to adapt qualifications to changing global market needs. The opposite model is provided

Globalization, accelerating economic change and late careers

13

by countries with liberal welfare regimes (e.g., Britain and the United States), which have relatively low levels of pension benefits and offer no or only moderate incentives for early retirement (Blöndal and Scarpetta 1998; Gruber and Wise 1999, 2004). We therefore expect that in these countries, individuals will try to stay in the workforce even at the expense of downward job mobility. Pension systems in Scandinavian countries can be expected to take a position between the two groups just discussed. Scandinavian pensions are fairly generous, but mostly offer only very moderate early retirement incentives. Instead, one partly finds options for a more gradual entry into retirement in these regimes. Due to fundamental changes in national retirement systems over the last decades, we have to extend our view beyond the public pension system. Nowadays, many retirement systems are characterized by a coexistence of three pillars: a public pension system, an occupation-based pension system, and private pension plans established by individuals. An analysis of pension systems and their effects on job mobility and employment exit patterns has to consider all three pillars and their importance in the various national contexts as well as how they encourage or discourage employment. An additional important feature is how portable the pensions are in case of job or even firm changes. Finally, in addition to explicit (public or private) pension programs, other welfare state subsystems, such as invalidity benefits or unemployment insurance, also have an important impact on the employment of older people, as Guillemard (1991) has argued. These programs often work as functional equivalents or possible extensions of early retirement schemes, without explicitly being labeled as such. An appropriate analysis and description of national pension systems therefore needs to be based on a broad consideration of all possible pathways to retirement, including these subsystems. This will be achieved in the respective country-specific chapters in this book. Occupational structures and labor market boundaries So far, we have concentrated our discussion on institutional filters pulling latecareer workers out of the labor market. But attention also needs to be paid to occupational structures, employment relations systems, and employmentsustaining policies, which, depending on their design, can push the older workforce out of the labor market. Since globalizing societies are characterized by accelerating economic change, there is an increasing tension between the demands from technological advancements at the workplace and the newly created job positions, on the one hand, and the qualification structure of workers in terms of vocational, technical, and professional skills, on the other hand. We hypothesize that labor market structures and labor market policies that enable or hinder employees to adjust their qualification profiles and to move to other jobs and occupations have an important influence on late-career mobility patterns and the retirement behavior of older people.

14 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld It is well-known that educational systems play a particularly important role for the organization of occupational labor markets and the rigidity of mobility structures in modern societies. Countries with educational tracking and welldeveloped vocational training systems often create rigid boundaries between occupations and qualification levels and reduce the mobility between jobs and occupations, particularly when the access to jobs is based on nationally recognized training certificates (Allmendinger 1989; Müller and Shavit 1998; Blossfeld and Stockmann 1998/99). The best example is the dual system of vocational training in many German-speaking countries where both theoretical learning in school and practical training at the workplace are highly standardized, and the training concludes with a recognized certificate that serves as a precondition for entry into specific jobs and occupations. This system also produces a strong differentiation over the life course between un- and semiskilled workers and the vocationally trained. In these countries, it is not easy, in fact it is almost impossible, to shift older aged employees who have lost their job in the process of accelerated structural change to other occupational positions. Early retirement therefore is often used as a policy response to the rigidity of occupational structures. This contrasts sharply with countries such as the United Kingdom or the United States, where people can relatively easily acquire vocational skills via on-the-job training. In these countries, we therefore expect higher levels of job-to-job or occupational mobility in old age. In addition to these differences in vocational training systems, training opportunities over the entire life course strongly determine the chances of an older workforce adapting to globalization-induced changes (Blossfeld and Stockmann 1998/99). In some countries such as Germany, Italy, and Spain, vocational training is more or less limited to a short period early in the life course. Other countries, in particular the liberal and the Scandinavian ones, more readily pursue the idea of life-long learning and enhance the chances (as well as the flexibility) of their older workforce to adapt to new demands. Consequently, we expect a stronger long-term life course effect of initial vocational training in Central and Southern Europe, because these countries lack institutionally provided opportunities for (re-) training. In these countries, the adaptation to structural and technological change is mainly achieved via generational replacement in the labor market (Blossfeld and Stockmann 1998/99). Employment relations systems Countries also differ with respect to the basic relationship between employers and employees and make it more or less easy to shift market risks to employees (Soskice 1999; Ebbinghaus 2000, 2002). On the one hand, there are open employment relationships in countries such as the United States and Britain (after Margaret Thatcher) that can be characterized as being decentralized, dualistic and based on free market forces. In such “uncoordinated market economies” (Soskice 1999), unions and employee representation boards play only a rudimentary role, so that workers are relatively unprotected from market

Globalization, accelerating economic change and late careers

15

forces and depend on individual labor market resources (such as human capital) (DiPrete et al. 1997). On the other hand, in many European countries, we find relatively “coordinated market economies” (Soskice 1999) where unions are strong and centralized procedures of negotiation are common. Uncoordinated and coordinated economic systems strongly differ in the level of employment protection. While job protection is highly developed in European countries with strong unions, we find relatively low levels of job protection in countries with uncoordinated economies. We hypothesize that in contexts where job protection and employment security are low, it will be easier for employers to react to the demands of structural change by simply shedding older employees with outdated qualifications. The easier it is for employers to dismiss their employees, the more we expect employees to exit into unemployment or to move between jobs. When personal wealth and welfare benefits are low, people will seek employment in other jobs demanding lower qualifications, or into specific precarious work forms such as (marginal) part-time work, fixed-term contracts or insecure forms of self-employment. Thus, the consequences of few employment protections accompanied by low welfare and pension benefits are low rates of early retirement, more flexibility in the labor market, and a trend toward more older workers employed in non-standard forms of work. On the other hand, in nations where employment protection is well developed, there are fewer opportunities for employers to shed their older employees through formal dismissal. In this case, strong legal restrictions protect individuals and older employees from being dismissed or forced to accept lower wages. However, restricted opportunities do not necessarily mean that we will find low rates of exit from the labor force before legal retirement age in these countries. If pension schemes (state, private insurance, occupational) provide financial incentives to exit the labor market early, we can expect a bifurcation based on individual qualifications. A high proportion of workers with obsolete qualifications will take the opportunity to retire early, while employees with skills that are still needed will stay in their jobs until retirement age. In sum, we expect more early retirement and low mobility rates (especially downward mobility) among older employees in highly protective employment systems. Employment-sustaining policies of the welfare state The likelihood of early labor force exits is influenced not only by occupational structures and employment relations systems but also by active, employmentsustaining policies aiming directly at employment maintenance and the reintegration of unemployed older workers into employment. The general aim to facilitate employment and to re-integrate unemployed workers applies to older as well as to younger employees. Policy may include such diverse measures as state supported and temporary jobs, limiting the duration of unemployment benefits (to increase the incentive for early re-entry into the labor market) as well as “activation” programs designed to re-train and re-integrate (older) employees into the labor market (DiPrete et al. 1997). In

16 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld general, these measures increase older employees’ attachment to the labor market and will lead to more job changes and ensure low rates of labor force withdrawal before the standard retirement age. In fact, many Scandinavian welfare states show that these policies work and lead to relatively high employment rates until retirement age. In Sweden, this pattern can be traced back to a labor market policy that placed much emphasis on full employment and used a combination of macro-economic policies to keep employment high (Calmfors 1993). Countries such as Italy, the Netherlands and Germany have fewer active labor market policies to support the re-entry into the labor market after a job loss, and if they were used, they were disproportionately targeted to the younger population. Late careers and institutional contexts – a conceptual frame Based on our discussion, we expect late-career mobility patterns to vary with nation-specific institutional filters as reflected in both the labor market and the welfare state. These filters interact with each other and are expected to lead to a considerable diversity in country-specific mobility patterns when one examines late-career employment at the individual level. Table 1.1 synthesizes our expectations and presents a categorization of different institutional regimes and their effects on late careers based on the discussed dimensions. In our research on late careers, we follow the well-known distinction of modern societies into different welfare regimes and categorize countries into liberal, social-democratic, and conservative (Esping-Andersen 1999), Southern European (Ferrara 1996), and post-socialist regimes (Mills und Blossfeld 2005). In liberal countries, we expect that low levels of employment protection foster a comparatively high level of labor market mobility among older workers. In addition, this is facilitated through a comparatively non-standardized educational system, leading to weak occupational boundaries and greater reliance on on-thejob training. The comparatively low levels of income security from public pensions in these countries lead us to expect that these mobility patterns will often continue even beyond formal retirement age. Early retirement transitions should therefore play a rather moderate role in liberal countries. In social-democratic countries, we also expect early retirement to play a moderate role and to find long work lives, though not due as much to market forces as in liberal countries. Rather, life-long (re-) training, active labor market policies and pension systems make late-career work patterns more durable and flexible. All in all, we expect that the high level of labor force participation in social-democratic countries is achieved by a lower level of job mobility than in liberal countries. In conservative and Southern European countries, on the other hand, we expect rather high rates of labor market exits through early retirement. Due to a relatively regulated employment relations system (insider-outsider labor market), the increasing need to restructure and rationalize work processes can hardly be

Liberal

Country showcases in this book

Resulting modal late career pattern

Active, employment supportive programs

Re-training programs

Sweden, Denmark, Norway

Relatively continuous careers, few early exit

Mobility within the labor market USA, Great Britain

Maintenance (public-induced)

Maintenance (market-induced)

Privatized pension Highly compensating universal pension systems, low generosity of public provision systems with strong public pillar

Low involvement of the state

Employmentsustaining policy

Pension system

High importance of on-the-job training

Occupational system

Moderate employment protection (strong in Sweden; weaker in Denmark)

Social-democratic

Germany, the Netherlands

Strong tendency towards early exit

Employment exit

Generous public pension system; strong early retirement incentives

Few active employment programs

Certification based occupations

High employment protection

Conservative

Institutional contexts and their impact on late careers in the globalization process

Employment relations Flexible labor markets system with low employment protection

Regime

Table 1.1

Italy, Spain

Strong tendency towards early exit

Employment exit

Generous pension schemes; strong earlyretirement incentives

Few employmentsustaining policies

Rigid occupational structures

High employment protection and elaborated insideroutsider market

Southern European

Post-socialist

Czech Republic, Estonia, Hungary

Country-specific path-breaking

Country-specific

Country-specific

Country-specific

Protection varies by country (stronger in Czechia; weaker in Estonia)

18 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld achieved by dismissing workers. Also, occupational boundaries created by highly standardized vocational training systems do not allow the older workforce to shift easily into newly created jobs and occupations. In order to meet the demands of the economy in a globally changing market, pension systems and other welfare systems therefore need to provide incentives for older workers to withdraw from the labor market early. Trends in post-socialist countries, however, remain hard to predict. Although these countries share a common origin, the socialist regime, they are obviously integrated into the world market on quite different roads. All kinds of institutions are still undergoing dramatic transformations in these countries, and the availability of data is still relatively restricted. However, the collapse of socialism and the rapid transition from closed planned to open global economies call for massive changes in the labor market. This situation initially increased the heavy use of early retirement schemes in transition economies. But due to small pension benefits and limited financial resources of post-socialist governments to secure old peoples’ decent standard of living, we expect older workers to be increasingly forced to work in these countries, so that part-time employment and other forms of precarious work should have spread in late career – even well beyond official retirement age.

THE ROLE OF CHARACTERISTICS OF THE WORK CONTEXT AND THE INDIVIDUAL There are not only differences in late careers between countries due to institutional variations, but also within countries across industries and individual resources. In particular, we assume that the work context and individual characteristics are important factors for the extent to which globalization affects older workers. Characteristics of the work context The first and most obvious aspect of the work context is the industry in which an individual is employed. We expect that specific industries will be more affected by global changes than others. In classical industries, such as manufacturing or textile, global technological changes and the growing international division of work will especially affect workers with rather traditional qualifications. Older employees in such sectors should therefore show a higher probability of job mobility or a higher rate of early retirement than employees in growing economic sectors such as the service sector. We also expect firm size to be an important factor for the job careers of older employees. The “crisis of mass production” (Castells 2000) means large firms have to change their Tayloristic organizational structures to accommodate more flexible modes of production. Often this involves massive downsizing, outsourcing, and the use of supplier networks, and jobs such as in production or

Globalization, accelerating economic change and late careers

19

development that were once performed within (large) firms are increasingly performed by outside suppliers. In order to downsize and outsource, larger firms first have to reduce their staff, and one can assume that older employees are especially affected by these decisions, because they are often more expensive and their re-training is less profitable. In many employment exit oriented regimes, the over-proportional existence of occupational pension schemes in larger firms has equipped employers with an efficient tool to control the size and composition of their workforce by offering early retirement incentives to their employees. Following this line of argument, we hypothesize a higher probability of early retirement for employees in large firms rather than in small firms. Characteristics of the individual Jobs may vanish entirely, because an industry is declining (e.g., mining) or because a specific type of work has become obsolete (e.g., through new technology), so a worker’s occupation and qualification will be very important for his/her late career in the age of globalization. We suggest that employees with low qualifications doing unskilled or semi-skilled jobs should be much more affected by economic restructuring processes than highly qualified employees with better job positions. Thus, they should be more mobile or retire earlier – depending on the pension system. In addition to the variation among persons in dependent employment, labor force status itself is important. For example, it is not surprising that – as Blöndal and Scarpetta (1998) show – the self-employed have a very low likelihood of leaving the labor market early. The nature of their work itself (running one’s own business) often does not permit retirement. In addition, the self-employed often lack early retirement schemes altogether and do not have other sources of income, which makes it an economic necessity for them to work as long as possible. Special attention needs to be paid to the question of how self-employed individuals are treated by national public pensions, because they vary markedly among countries. We expect that if the self-employed are not or only partly included in pension schemes, their late-career patterns will deviate more from those of the “regular” workforce. Finally, we expect gender-related differences in late careers, because female and male employment patterns still differ in most societies. We know that, due to gender-based labor market segregation, women are found in different types of jobs than men (e.g., service jobs in the tertiary sector). We therefore expect that women will be affected to a lesser extent than men by the production sector’s need to rationalize. On the other hand, women’s actual retirement decisions are often dependent on their husband’s retirement decision, which due to age differences between spouses may lead to women withdrawing earlier from employment. Previous research on “coupled retirement” (Drobniþ 2002; Blöndal and Scarpetta 1998) has in fact shown that many couples “coordinate” their retirement transition. Thus, the influence of coupled

20 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld retirement has to be considered in country studies – especially when studying women’s late careers.

SUMMARY OF THE KEY EXPECTATIONS We have argued that processes of economic globalization have produced an accelerating divergence between the demands of rapidly changing workplaces and new jobs and the qualification structure of older employees. Societies can respond to this problem either by allowing redundant employees to leave the labor market earlier via early retirement programs (employment exit strategy) or by adapting older workers’ skills and qualifications to new job demands (employment maintenance strategy). Which strategy dominates in a specific country depends on the nation-specific institutional context that serves to filter or to mediate the effects of globalization on the individual. In countries with rigid labor markets, generous pension systems, high levels of employment protection, strong labor market boundaries (due to rigid occupational structures), and few active employment programs, we expect a strong trend towards early retirement for workers whose qualifications have become redundant. We predict to find this pattern in Central and Southern European countries. However, countries can use an alternate strategy of maintaining an older workforce – either through an active and highly involved state, as found in the Scandinavian countries, or through the reliance on market mechanisms and low welfare benefits, as found in liberal countries. We also expect to find differences within countries, since the characteristics of working contexts or of individuals themselves are important determinants of the extent to which globalization affects the individual. We suggest, for example, that it will be the older employees in declining industries and occupations who will be hit most strongly by globalization. DATA AND METHODS We use individual-based longitudinal data and event history methods (Blossfeld and Rohwer 2002) to test our hypotheses regarding the impact of globalization on late careers. The majority of data used in this study comes from retrospective or longitudinal panel surveys. In Germany, they include the German SocioEconomic Panel (1984–2002) and the German Life History Study (birth cohort 1919–21). The study on the Netherlands uses information from several waves of the Aanvullend Voorzieningen Gebruik Survey (1979, 1983, 1987, 1991, 1995, and 1999). The Swedish analysis draws on the Swedish Level of Living Survey (1991, 2000), while the Norwegian study uses a sample from the FD-trygd database (1992–97) pooled with firm-specific data from various other register sources. Denmark also used register data from the IDA database (1980–2001). The Hungarian study employs data from the cross-sectional Household Monitor

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Survey (2003), which models individual employment careers longitudinally for the time period 1988–2003. The Estonian study uses the Family and Fertility Survey (1997) as well as the Estonian Labor Force Survey (1989–2002). The British Household Panel Survey (1991–2002) was used for the United Kingdom and the Health and Retirement Survey (1975–2000) for the United States. The analysis of Italy was based on the Italian Longitudinal Household Survey (1997, 1999, and 2001), while the Spanish analyses used the Spanish Labor Force Survey (1964, 1969, 1974, and 1976–2003). Due to data limitations and an absence of adequate longitudinal data, the Czech Republic employs only a crosssectional data set (Czech Labor Force Surveys since 1995). Due to the low labor force participation of women in the cohorts under study, some country studies only have data on the late careers of men. For those countries with high labor force participation among older women (i.e., liberal, social-democratic, and post-socialist countries) the national studies also provide empirical analyses for female late-career transitions. For our purposes, event history methods were ideal, as they allow for a “causal-type” analysis of events that indicate changes from one state to another. This approach is also ideal for examining the empirical consequences at the individual level and allows us to include events at the meso and macro level. The analyses examined the transition in the late employment course within the labor market and out of the labor market. Statistical applications included piecewise constant exponential, logistic, Cox proportional hazard and logit models. Since technical and mathematical aspects of the models and methods have been specified elsewhere (Blossfeld and Rohwer 2002), we focus in this book on substantive results instead of methodological discussions. As with any secondary data analysis, the comparability of the analyses was dependent on the various datasets available, which led to slight differences in the analyses.

STRUCTURE OF THE BOOK After this introductory chapter, Chapter 2 sets the country studies into context by providing a short comparative description of selected economic and institutional trends: retirement trends, quantitative and qualitative aspects of old age employment and unemployment as well as a first test of the relation between national institutional settings and old age employment rates. Then twelve country-specific chapters follow. The book is divided into five sections by welfare state regimes. The first section contains the conservative regimes of Germany (Chapter 3) and the Netherlands (Chapter 4). This is followed by the Southern European regimes of Italy (Chapter 5) and Spain (Chapter 6), the liberal regimes of the United States (Chapter 7) and Britain (Chapter 8), the social-democratic regimes of Sweden (Chapter 9), Norway (Chapter 10), and Denmark (Chapter 11), and finally the post-socialistic regimes of the Czech Republic (Chapter 12), Estonia (Chapter 13), and Hungary (Chapter 14). Chapter 15 synthesizes the results, confronts the expectations from this introductory

22 Sandra Buchholz, Dirk Hofäcker and Hans-Peter Blossfeld chapter with the evidence in the country-specific chapters and discusses the added value of this approach in the field of late-career and retirement studies and globalization research. Each of the following country studies presents an overview of late-career processes and institutional backgrounds. To allow for a systematic comparison with the theoretical framework, countries have been ordered according to the institutional classification outlined above. Taken together, the various country studies will allow us to systematically investigate the influence of globalization on late career pathways in different institutional regimes of modern societies.

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