02 Jun 2008

Equality of Retirement Benefits Received by Men and Women in Selected European Countries

Childbearing and Future Benefits

Irena E. Kotowska / Joanna Stachura / Pawel Strzelecki

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European Network of Economic Policy Research Institutes (ENEPRI) Research Report No. 56  / 24 pages

This research report seeks to answer the question of whether old-age benefit rules for women could be altered with the aim not only of ensuring better benefits for older women but also of stimulating fertility. To address this question, a micro-simulation model has been developed. The input data for the model has been drawn from labour force survey data on employment patterns by age, gender, education, numbers of children, variations in the timing of caring for children and wage profiles for five countries: Italy, Latvia, Lithuania, Poland and Germany. Future retirement benefits are simulated under three variants: variant I uses country-specific labour market data and old-age pension systems; variant II makes use of German labour market data and country-specific old-age pension systems; and finally, variant III refers to country-specific labour market data and the Polish defined-contribution system. Each simulation variant entails four scenarios, which refer to the number of children and the timing of childcare.
The simulations show that the effects of differences in old-age systems for retirement benefits are relatively small and that what really matters is the labour market structure, which reflects the impact of children on employment patterns. Therefore, the report concludes that policies aimed at reducing the negative consequences children have on the labour market participation of mothers are recommended for increasing their old-age pensions. This approach would also help to diminish work–family tensions, which in turn could facilitate positive decisions about having children.