In this paper we begin by describing the labour market behaviour of individuals around pension age. We also consider the coverage of the various parts of the social security system. We go on to explain the structure of state pensions in the United Kingdom and compute the incentives for retirement that the structure creates, focusing on early retirement and the role of disability benefits, which are especially relevant for lower-skilled workers. We compare these incentives with those facing workers with private occupational schemes who now make up the majority of older workers close to retirement. The structure of incentives is found to match well with the observed patterns of labour market participation in the data.
Authors
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
Director
Paul has been the Director of the IFS since 2011. He is also currently visiting professor in the Department of Economics at University College London.
Journal article details
- Publisher
- American Economic Association
- Issue
- May 1998
Suggested citation
Blundell, R and Johnson, P. (1998). 'Pensions and labour-market participation in the United Kingdom' (1998)
More from IFS
Understand this issue
Retirement is not always a choice that workers can afford to make
6 November 2023
The future of the state pension
21 December 2023
Pensions are far from broken but could still use a fix
18 December 2023
Policy analysis
The future of the state pension
13 December 2023
Recent trends in and the outlook for health-related benefits
19 April 2024
4.2 million working-age people now claiming health-related benefits, could rise by 30% by the end of the decade
19 April 2024
Academic research
Saving after retirement and preferences for residual wealth
18 January 2024
The labor market effects of disability benefit loss
29 September 2023
Old age risks, consumption, and insurance
21 March 2023