Transition from the labor market to retirement among immigrants in Germany

Nadja Milewski, Universität Rostock

This study analyzes the transition from the labor market to retirement among international immigrants living in Germany as compared to non-migrants. The theoretical framework was derived from the life-course perspective and the human-capital model as well as hypotheses on migrant health. By including men and women in our study we consider the intersection between migrant status and gender. Our analysis is twofold: We describe the patterns and determinants of the labor market status of elderly persons. We analyze the entry into retirement, distinguishing between old-age retirement and pensions due to a reduced earning capacity. We use data of the German statutory pension insurance system (Deutsche Rentenversicherung, Public Use Files, years 2002 to 2009). The datasets contain individual information for persons who were gainfully employed in Germany, including data on the beginning of retirement, the type of pension and the nationality of the person as well as a small number of socio-demographic indicators. Our sample includes men and women aged 50 to 65. The sample for the analyses of the labor market status contained about 230.000 men and 217.000 women; among them about 10% were foreign nationals. Foreigners, both men and women were more likely to spend their last active years on the labor market in marginal employment, unemployment, or welfare dependency. At the same time, they used significantly less often early retirement options (‘Altersteilzeit’). For the entry into retirement, the retirement histories were constructed for about 2.2 million women and men aged 52 to 65 years in total, of whom were about 12% foreigners. We found that foreign men had slightly lower transition rates to pensions due to a reduced earning capacity as compared to Germans, whereas this risk was higher for foreign women than for Germans. Both migrant men and women made slower transitions to old-age pensions.