Ethnic Inequality in Retirement Income: A Comparative Analysis of Immigrant-Native Gaps in Western Europe
A paper by Jan Paul Heisig, Bram Lancee and Jonas Radl, partly funded by the GEMM project, as presented at the “More Years Better Lives” Midterm Conference in Rome on the 1st and 2nd of December 2016.
Previous research unequivocally shows that immigrants are less successful on the labour market than the native-born population. However, little is known about whether ethnic inequality persists after retirement. We use data on 16 Western European countries from the European Union Statistics on Income and Living Conditions (EU-SILC, 2004–2013) to provide the first comparative study of ethnic inequalities among the population aged 65 and older. We focus on the retirement income gap (RIG) between immigrants from non-EU countries and relate its magnitude to country differences in welfare state arrangements. Ethnic inequality after retirement is substantial: after adjusting for key characteristics including age, education, and occupational status, the average immigrant penalty across the 16 countries is 28 per cent for men and 29 per cent for women. Country-level regressions show that income gaps are smaller in countries where the pension system is more redistributive. We also find that easy access to long-term residence is associated with larger RIGs, at least for men. There is no clear evidence that immigrants’ access to social security programs, welfare state transfers to working-age households, or the strictness of employment protection legislation affect the size of the RIG.