A review of existing comparative studies

In the following brief review of existing comparative studies I will con-centrate on studies attempting to describe or explain variation in the income distribution among retirees in developed countries. All the studies mentioned in the following have been based on micro-data from the Lux-embourg Income Study (LIS). The establishment of LIS - containing income surveys from a number of developed countries - has greatly enhanced the possibilities for comparative research in the field of income stratification. In particular it has provided new opportunities to study particular subgroups of the general population in each respective country -for instance, the retired. Among the studies which have been published over the last decade by users of LIS, a considerable number have dealt with thernes specifically related to income and econornic well-being among the elderly (see for instance Rainwater and Rein, 1988; Smeeding, 1988; Palme, 1989; 1993; Kohl, 1988; 1990; 1992; Hedstrom and Ringen, 1990; Achdut and Tarnir, 1990; Pestieau, 1992; Smeeding et al., 1993; Del-hausse et al., 1994; Hutton and Whiteford, 1994; Korpi and Palme, 1994;

Whiteford and Kennedy, 1995; Doring et al., 1994; Hauser, 1997).

The studies can be grouped into three main categories: 1) descriptive studies that are primarily concerned with describing cross-national varia-tion in the distribuvaria-tion of income among the retired or the older secvaria-tion of the population across OECD countries; 2) analytical studies that to some extent pertain to explaining variation in the degree of inequality / poverty found among the elderly in different countries with reference to institutional features of the respective pension systems; and a few 3) internally focussed analyses that mainly rest their argument on an analysis

of the contribution made by different income components (public and private sources of income) to the leve1 of inequality in total disposable income found among the retired in each respective country.

Descriptive studies: comparative income distribution

The first generation of LIS studies mainly sought to describe cross-national differences in the income position of the elderly, the composi-tion of income packages, poverty rates, general indices of inequality etc., without attempting in a systematic way to provide explanations (Rainwa-ter and Rein, 1988; Smeeding, 1988; Hedstr6m and Ringen, 1990; Achdut and Tamir, 1990).180 Five sets of conclusions from these studies, which all refer to the years around 1980, are nevertheless of direct relevanee to the present study:

The e1derly (for instance, defined as people be10nging to households with heads above 60) are almost nowhere a particularly disadvantaged group in terms of household equivalent income. The age profile of in come seems in most countries to peak roughly at age 50, and there is only a fairly modest downturn in the years when one must expect that most people withdraw from the labor market. The timing of this downturn varies considerably with differences in the effective retire-ment ages between the countries studied.

The degree of overall income inequality (measured by the Gini coeffi-cient and other summary indices, as well as the ratio of top-to-bottom decile/quintile income leveis) among e1derly households shows wide differences among developed countries. In some countries inequality among e1derly households is greater than in the general population, while in some countries it is small er. When country cases are ranked, one usually finds Sweden with the lowest inequality in disposable income among the e1derly, and the US with the by far largest inequal-ity coefficients and income differentials.

In almost all countries public pensions make up a dominating share of the income packages of elderly households. Wages and salaries take the second position, while private pensions and capital income nowhere seem to play more than a fairly modest role (on average, a maximum 10-15 percent of total gross income, respectively). The composition of income packages of elderly households still shows

180 For a summary and discussion of four of the most important of these early works see Hauser (1993).

significant cross-national variation; especially the role of eamings seems to vary substantially.

- There is a general tendency across countries for the income position of the elderly to "deteriorate" with the age of the household head. The group of individuals belonging to households with very old heads coincides to a large extent with another distinetly disadvantaged group: one-person households with a female head. There are, how-ever, important cross-national differences in the extent to which these groups fall behind the other elderly households. In the US the disad-vantaged position of elderly, single females Cwidows and non-mar-ried) is especially pronounced CSmeeding et al., 1988).

- Despite their descriptive intention a few of the studies mention find-ings that touch upon the question of substantive institutional explana-tion for the observed cross-naexplana-tional variaexplana-tion. Both Hedstrom and Ringen (1990) and Achdut and Tamir (1990) report that inequalities among the elderly tend to be least in countries where public transfers are responsible for a relatively large part of the total income paekage.

In other words, it is indireetly suggested that more generous systems for public retirement provision are associated with particularly low levels of inequality in disposable ineome.

Among the more reeent deseriptive studies in the field, the study by Whit-eford and Kennedy (1995) is by far the most comprehensive. The authors describe and compare a range of different aspects of the income distribu-tion found among the elderly in 11 OECD countries with reference to LIS data from the mid-1980s. One of the distinctive features of this study, is the ambition to explore the consequences of a more comprehensive income concept, which is supposed to include both the value of public services provided for the elderly as well as the economic advantages associated with home-ownership (imputed rent). Whiteford and Kennedy (1995) find that a more comprehensive income concept tends produce a picture of the elderly being more privileged (less disadvantaged) vis-a-vis the non-elderly, and of inequality among the elderly being less severe, compared to findings based on the traditional concept of disposable income. Even more importantly, they claim that the shift in favor of a more comprehensive income measure reduces the scope of cross-national differences in important outcome variables such as the income position of the elderly and the degree of income inequality found among this population subgroup:

In general, broadening the concept of resources to encompass government non-cash benefits and other forms of imputed income leads to a substantial narrowing of the apparent differences between countries in the outcomes of sodal policy interventions. (Whiteford and Kennedy, 1995:97)

The highly tentative analytical observations that were surfaeed in both Hedstrom and Ringen (1990) and Aehdut and Tamir (990) are eountered in a subtle way by Whiteford and Kennedy:

It has been shown that the standard framework for assessing income distribution will tend to make countries with smaUer welfare states look less equal than coun-tries with higher levels of spending on sodal protection. (Whiteford and Kennedy, 1995:97)

Finally, I should mention that, while all the descriptive studies that have been referred to so far foeus exclusively on the distribution of household (equivalent) income, two fairly reeent studies explore the distribution of personal ineome in eonjunction with household ineome, and both with special attention to the relative ineome position of fernale pensioners (Hutton and Whiteford, 1994; Doring et al., 1994).

One of the most important eonclusions that has emerged from both older and younger generations of deseriptive studies in this area is of a methodological nature: The picture of cross-national variation in the ineome position of elderly households and in the degree of ineome ine-quality prevailing among this population segment is highly sensitive to a range of methodological choices: the income unit, the in come eoncept, equivalenee scales and the particular inequality index.