Leaving the labour market: the impact of exit routes from employment to retirement on health and wellbeing in old age

Björn Halleröd, Johan Örestig, Mikael Stattin

The study analyses whether and to what degree specific routes into retirement affect older people, i.e. the relationship between heterogeneous exit patterns and post-retirement health and wellbeing. We used longitudinal data from two points in time; data related to t0 were collected in 1993, 1994, 1995 and 1996 and data related to t1 were collected in 2002 and 2003 (N = 589). We focused on older people (55+ at t1) who were employed at t0 and retired at t1. We used confirmative factor analysis to identify identical measures of health and wellbeing at both t0 and t1. Hence, we were able to control for pre-retirement health and wellbeing when evaluating the effects of different exit routes. These routes were defined as dependence on incomes from sickness benefit, disability pension, part-time pension, unemployment insurance and active labour market programmes. Our initial structural equation model showed a clear relation between exit routes and post-retirement wellbeing. People who prior to retirement were pushed into social benefit programmes related to health and unemployment were significantly worse off as retirees, especially those with health-related benefits. However, these relationships disappeared once pre-retirement wellbeing was added to the model. Our main conclusion is that post-retirement wellbeing first and foremost is a consequence of accumulation of advantages and disadvantages during the life course. Both labour market exit routes and post-retirement wellbeing can be seen as outcomes of this process. There are no independent effects of the retirement process. Judging from our findings, there is no reason to believe that involvement in social security programmes allowing early retirement on health grounds has any additional negative consequences for health and wellbeing.