The Declining Pension Wealth of Employment for the Birth Cohorts 1935–1974 in Germany

Abstract

Abstract Social inequality in the labor market leads to similarly unequal pension entitlements. From a life-course perspective, however, there are two components of inequality in the labor market: the degree of stability of employment until retirement, as well as the amount of gross income earned in periods of employment. The following analysis focuses on working-life and income trajectories of the birth cohorts 1935–1974 in East and West Germany until age 40. The results demonstrate a structural shift in the German labor market towards less stable employment in the first half of the working career. The labor market therefore offered increasingly less stable employment, with an especially stark negative trend for East Germans. Only West German women born after 1945 experienced a positive trend in employment stability. For employees of all birth cohorts, the analysis demonstrates that instability in the employment career has a strong negative effect on income and, subsequently, on pension wealth. The impact of income discrimination against those with less employment stability thus remained similar for the later-born despite the more widespread experience of employment interruptions.