The Health-Employment-Longevity Nexus: Implications for Retirement Age Policies in European Countries

Abstract

Abstract Background Advances in medical knowledge and technology have led to increased general and healthy life expectancy in Europe. Combined with declining fertility rates, these trends have resulted in an aging population. Many European countries have been reluctant to adjust the retirement age, putting pension funds and Pay-As-You-Go social insurance systems at risk. Linking entitlement age to life expectancy could mitigate this risk and extend working life, but such policies are politically unpopular. This study investigates the empirical relationship among self-perceived health, employment, job quality, and life expectancy in the European context. Methods The study analyzes the determinants of self-rated health using the SHARE database, combined with general and healthy life-expectancy data from EUROSTAT and, where missing, the WHO, focusing on European countries. Results In Europe, both past and present employment improve self-rated health. Job quality has a detrimental effect on self-rated health for women and a positive effect on men. Life expectancy and healthy life expectancy raise self-rated health, while poverty rates negatively affect it. Job quality is widespread among European women, and its negative effect on health rises with age. For European men, job quality has a positive effect, peaking around age 56. The effects of employment and job quality on self-rated health are simultaneous. In European countries with an elasticity >1, healthy life expectancy rises faster than general life expectancy at higher ages, suggesting an improved ability to work at older ages. This finding indicates that adjusting the retirement age could be a powerful tool for improving the sustainability of social insurance systems in Europe. Conclusions For younger European women, it may be rational to set higher retirement-age increments and put them on a declining course as they age, considering the gender-specific age dynamics and job quality effects on health. Key messages • In Europe, employment and job quality significantly influence self-rated health, with gender-specific effects that vary with age and impact retirement age policies. • Adjusting retirement age in line with healthy life expectancy could improve the sustainability of European social insurance systems, considering health-employment dynamics.