This article was published in TSE science magazine, TSE Mag. It is part of the Autumn 2023 issue, dedicated to “The World of Work”. Discover the full PDF here and email us for a printed copy or your feedback on the mag, there.
Gender gaps in the job market can get even wider when we enter retirement. Francesca Barigozzi, Helmuth Cremer and Jean-Marie Lozachmeur explain why pensions must not be blind to inequalities that hurt both men and women.
Should pensions redistribute wealth between men and women?
In most pension systems, particularly in France, benefits are based on contributions which are in turn based on wages. Women live longer than men, on average, but as they tend to have lower wages and shorter careers due to childrearing, they receive lower pensions.
These longevity and wage gaps are decreasing, but as long as they continue to exist, some redistribution between men and women is justified. This requires gender-specific pension benefit rules. However, European law forbids pension benefits from being determined by gender. Our research highlights the negative consequences of this gender neutrality rule for both men and women.
Our results show that gender neutrality is unfair. Specifically, it is extremely advantageous to single men (who should contribute more than they do), to the detriment of single women and couples (who should contribute less than they do). Male spouses are also worse off, given that couples typically pool their resources while women live longer.
Should unpaid work be included in the calculation of pensions?
Childcare and housework are not explicitly accounted for in our model. While giving women credit for this unpaid work would be fair, it might incentivize them to take more leave, which is bad for their careers. Designing explicit compensation for women’s unpaid domestic work would be equivalent to asserting that housework and childcare are women’s responsibilities. Instead, all family duties should be equally shared between partners.
Are women destined to be trapped by lower wages and lower pensions?
Some symbolic policies like gender neutrality are ineffective or even harmful as long as fundamental differences in gender roles persist. The pension system is just one of the possible tools for redistribution: other instruments, like providing childcare, may be more effective. But social norms, the perception of women’s role in the family, and society's attitude towards working mothers are deeply enshrined in traditions and cannot be simply changed by public policy.
FURTHER READING
Francesca Barigozzi, Helmuth Cremer, and Jean-Marie Lozachmeur, “Gender wage and longevity gaps and the design of retirement systems”, Journal of Economic Behavior and Organization, vol. 209, 2023, pp. 263–287.
