Labour force activity after 65: what explain recent trends in Denmark, Germany and Sweden?

Mona Larsen, Peder J. Pedersen

In most OECD member countries labour force attachment, has increased in recent years not only in the age groups 60-64 years but also among people 65 years and older. Focus in this paper is on the trend in older workers' labour force participation in Denmark, Germany and Sweden since 2004. Main emphasis is given to people aged 65-69 years eligible for social security retirement programs from age 65. The gender aspect is included to accommodate different trends for women and men. To explain country differences in trends, the importance of changes in retirement policies of relevance for this age group and cohort relevant changes in education and health is examined and discussed. Further, country differences in the impact from education and health is examined. Results show that the largest increase in labour force participation among people aged 65-69 years has taken place in Sweden following by Germany, while the increase in Denmark is rather small. While the increase in Germany mainly seems to be a result of policy reforms, the increase in Sweden appear to be a result of a combination of policy changes and an increasing educational level. Financial incentives seem most important in Germany and only of minor importance in Denmark, where policy changes directed towards individuals above the age of 65 appear to have been too small so far to affect retirement behaviour significantly.