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The effect of labour earnings on post retirement income

Roberta Adami (Department of Finance and Business Law, University of Westminster, London, UK)
Orla Gough (Department of Finance and Business Law, University of Westminster, London, UK)
Angeliki Theophilopoulou (Department of Finance and Business Law, University of Westminster, London, UK)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 26 July 2013

Abstract

Purpose

The purpose of this paper is to investigate how changes in the distribution of pre retirement labour earnings affect post‐retirement income in the UK.

Design/methodology/approach

The authors estimate a PROBIT model and perform a counterfactual simulation to assess the effects of changes in the earnings distributions on pensions in the UK. The paper uses data from the British Household Panel Survey (BHPS).

Findings

The distribution of labour earnings before retirement plays a considerable role in the pension distribution of current retirees, particularly for low and medium incomes in the period 1991‐2007 for the UK. Improvements in Social Security have lifted many out of poverty; however there is still a gender gap as it is found that the current system of public and private schemes has not substantially improved pension income dispersion among women. On the other hand, changes in labour earning distributions have benefited more poor female pensioners than male.

Originality/value

The paper uses BHPS data, which is a longitudinal panel of survey questions made to UK households between 1991 and 2007. The level of detail of such data allows the study of the complete distributions of pre and post retirement income rather than focussing only on some measures of dispersion.

Keywords

Citation

Adami, R., Gough, O. and Theophilopoulou, A. (2013), "The effect of labour earnings on post retirement income", Journal of Economic Studies, Vol. 40 No. 3, pp. 284-297. https://doi.org/10.1108/01443581311283925

Publisher

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Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited