Old and New Welfare States Retaining Older Workers in the Face of Crisis: The Case of COVID-19 in Europe

The Coronavirus pandemic was a unique crisis in Europe as an unprecedented health and labour market shock barely disrupted long-term trends toward active ageing. We study the role of social policy responses and pre-existing welfare state institutions in moderating older workers’ exit from work following the crisis. Using a cross-national panel survey and exploiting institutional variations across Europe, we examine the association between older workers’ exit outcomes during COVID-19 and a set of macro-institutional indicators, net of the economic shock and pre-pandemic activation levels. Results show that the use of novel job retention schemes was systematically related to the retention of older workers, whereas extended unemployment insurance likely had a limited influence. Higher retirement ages and greater reliance on private pensions were associated with lower exit rates but mostly among lower-educated workers. Our findings highlight the significance of welfare states managing the crisis-driven economic shock and offer useful policy implications.