Inequality of Opportunity in Retirement Age The Role of Physical Job Demands

Abstract

We quantify differences in the retirement age between manual and non-manual workers and evaluate these differences in the context of the literature on equality of opportunity. The focus is on the question how individual background during childhood transmits through physical demands of occupations on retirement ages. Individual retrospective data from the German Socio-Economic Panel are used to analyse labour force dynamics over the years 1984 to 2011. Discrete time duration models suggest that retirement ages differ substantially between manual and non-manual workers. To elaborate how such differences are explained by individual background characteristics on the one hand and effort and luck on the other hand, we make use of tests for stochastic dominance and a Blinder-Oaxaca decomposition. The result is that individual background characteristics explain a share of about one third of inequality in retirement ages as transmitted through physical demands of occupations.