Mobility Of Labour and Pension Outcomes: An Analysis Of The European Cross-Border Social Security Coordination

Pension systems were designed in a time characterized by stable labour markets and limited cross-border mobility. As the labour market becomes increasingly diverse, upcoming generations will be faced with challenges of differences in income taxation and social security systems, as these generate discrepancies in income. We argue that changes in life-cycle due to mobility of work to another country are happening and welfare state objectives need to address these changes. 

Labour mobility plays an increasing role in welfare policies and demands a new approach in national welfare states. This paper analyses the impact of mobility of labour between the states, in the European context and questions whether the welfare state attaines equally achieves its objectives on domestic and frontier workers. Despite accessibility of pension from different countries, due to difference in welfare objectives, the welfare of mobile pensioners can vary a lot. The results of the analysis show that structural differences in pension systems (e.g. retirement age, waiting period, benefit levels) affect the welfare of mobile pensioners. The case of frontier workers in Luxembourg and Belgium illustrate that despite legislation on coordinating the pension outcomes is in place, this produces uneven effects on the earnings of mobile pensioners and will in the future lead to more obstacles for the welfare of the upcoming mobile generation.