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Wealth and labour force participation of older women
Here we examine the economic well-being of older women in terms of wealth and discuss the possible relationship with their labour force participation. With increasing life expectancy, women and men spend an increasing number of years in retirement, and, although there has been substantial progress in reducing poverty among the elderly, older women remain the most vulnerable group (for a review, see Gornick, 2004). As a source of financial security, the elderly may rely on public and private transfers and on their wealth, and they can also supplement their income with earnings by remaining in the labour force. In Table 8 we present median net worth (as a percentage of the median net worth of all households) and home ownership rates for two types of household: single older women and those households with an older woman as head or spouse. We also compare the labour market activity rates of older women.[1]
Overall, households with older women seem to be doing well in terms of wealth, with wealth holdings some 2-4 times above the respective country median. (In Italy, older women's wealth holdings are just above the country median.) The results for single elderly female households are a bit more varied across the countries. In the US, single older women have three times the country's median wealth holding, while in Sweden and the UK the figure is just a little above the median. In Italy and particularly in Germany, single older women seem to be lagging behind, with wealth holdings below each country's median. No such striking cross-country differences are to be observed in terms of income (Gornick et al., 2009a): in all these countries, the income package of an elderly household with a female head or spouse is about 80-90% of the median for all households, and for single older women it is about 65% of the median for all households.
What we do see are differences in labour market activity rates. In Sweden, we observe relatively high employment rates among women even after retirement. Wealth is quite high compared to the median, but not home ownership rates. Nor is income poverty high among single older women (14%). In the United States, we also observe a high activity rate, this time accompanied by both high relative wealth and home ownership, though income poverty is quite high, too (35%). The lowest employment rate among older women (and women in general) is seen in Italy. This is accompanied by high home ownership rates, but not high relative wealth levels. The poverty rate is about 20%. In Germany, low wealth levels for single older women and low home ownership are combined with higher employment rates than in the UK, which has higher wealth levels for single older women and higher levels of home ownership. The poverty rate stands at 19% in Germany and 26% in the UK. It seems that lower participation rates among older women across countries reflect not only differences in retirement behaviour in some cases, but also lower rates for women more generally.
Recent research examining the effect of wealth on the labour force participation of the elderly during the recession has found the effect to be modest compared to the scale of the reduction in the proportion of the elderly in work. Here, based on numerous indicators, it seems that there is considerable interaction of several forces, and that this contributes to the overall economic well-being of older women. On the one hand, we see countries with a generous welfare system, but with average wealth, low home ownership, a high employment rate, and low income poverty (Sweden). On the other hand, we have countries with a less generous system, high rates of wealth and home ownership, a high labour market participation rate, and also very high poverty rates (US).
[1] The research on the effect of wealth on labour market participation is quite limited and shows only small negative effects for men. The question for women is more complex, given the possibility that the decision on whether or not to work is a joint one.
