It's not late entry: human capital, welfare states and the pension penalty experienced by post-war migrants who retired in the European Economic Area

Abstract

Since the 2000s, migration within and into the European Economic Area (EEA) has increased significantly. Some migrants will retire in their destination countries. This makes questions about their retirement protection increasingly relevant for social policy. To address this, we examine past experience. Using the Survey of Health, Ageing and Retirement in Europe (SHARE), we compared the pensions of post-1945 migrants, who settled in their host country, with non-migrants. We considered migrants who moved into and within the EEA, from poorer and richer countries. Where pensions were lower we sought to explain this in relation to the migration literature. As expected, we found some evidence that migrants’ pensions were lower, although significant variations were observed between EEA migrants and non-EEA migrants. However, surprisingly there were few indications that migrant pensions were lower because migrants as a whole were disadvantaged through late labour market entry or employment discrimination. Instead educational disadvantage mattered most, particularly for the highly educated: all highly educated migrants received lower rewards for their human capital than comparable non-migrants. Migrants who settled in countries with less-protective pension systems were also disadvantaged. Making retirement outcomes for migrants more equal would, thus, mean improving career opportunities for highly educated migrants and steps towards more-inclusive pension systems everywhere.