The Effect of Children on Early Retirement Behavior in Europe

Younghwan Song, Union College

Using individual data drawn from the Survey of Health, Ageing and Retirement in Europe, this paper finds that having fewer children facilitates early retirement of the elderly in ten European countries. The reasons vary by sex. For men, it is because having fewer children reduces the likelihood of having young children who need financial support from them in later life. For women, it is because women with fewer children are less likely to have employment interruptions during their reproductive phase and thus become vested in public/private pensions earlier than women with more children. These effects of children on early retirement are materialized through various institutional incentives for early retirement, such as the availability of optional early retirement and higher implicit tax rates on continued work in later life.