Income and Income Changes

The availability of longitudinal surveys is of fundamental importance to empirically assess how income reacts to age and other time-varying factors, most notably retirement. The second wave of SHARE thus helps shed light on how the socioeconomic characteristics of the elderly in Europe have evolved over time and evaluate the effects on income produced by such dynamics. The first important issue to investigate concerns the level and the adequacy of the income resources available to households and individuals. We stress in this chapter that an important role is played by household-level income sources, such as some welfare state benefits, imputed rent from owner-occupied housing and home-production of food. A second issue we investigate is how individual incomes are affected by retirement. We exploit the longitudinal nature of SHARE to investigate whether leaving the labour market entails a drop in income, and whether income changes are of similar magnitude among the retired as among the employed.