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CHAPTER 5: SIMULATIONS

In this chapter we conclude our explorations with quantitative simulations based on
regression analysis. In particular, we simulate the effect on statutory retirement and
employment status in the Czech Republic if the Czech population (with its existing
personal characteristics, demographics, education, health and so on) were subject to
the policy environment of another country or another period of time. In doing so we
partly overcome the limits of the partial insights explored in the previous chapters,
and address the possible critique that retirement and working decisions are not only
driven by the institutional setup of the retirement scheme in individual countries, but
also by a population’s socio-economic and health conditions.

For these simulations we use SHARE data collected in 2007 and 2011. As in the rest
of the analysis, we use the original weights in order to ensure that our simulations are
representative at the country level. We explain our approach using an example for
women and men in the Czech Republic and Sweden. We employ the same approach
considering two other countries: the Netherlands and Austria, for which we have
sufficiently large samples of SHARE data.

Key findings from simulations

Here we summarize our key factual findings from these simulations. Further
technical and methodological details are provided at the end of this chapter.

Despite differences in socio-economic history between the Czech Republic and
Western countries during the second half of the 20th century, and despite the
Czech Republic's inferior average socio-economic conditions, we do not find
many differences in employment or incidence of retirement between these
countries.

Differences between the Czech Republic and Sweden in educational structure
(lower average educational attainment), health conditions (inferior physical
and cognitive health status), occupational structure (higher proportion of
manual work), number of children raised, and the composition of households,
contribute relatively little to the wide gap in employment rate and the
incidence of retirement. The single major influential factor in retirement
decisions seems to be institutional incentives represented by the statutory
retirement age and the tax-benefit scheme.

Controlling for different personal characteristics, the employment and
retirement gaps between both countries persist both for women (greater) and
men (lesser).

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