Structured Dependency
Did they Retire or were they Pushed

Aside from a passing interest in the impact of the State Earnings Related Pension Scheme on future tax burdens, economists seem generally to have ignored the issues of elderly people and of ageing in Britain. Economic questions have been left largely to social policy analysts and much of their writing has been placed squarely within a radical framework often described by the term "the political economy of ageing". Economic questions about ageing are often given an explicitly political dimension: the state, because it is the most important determinant of the economic status of the elderly population, is regarded as capable (and culpable) of deliberately creating a new form of structured dependency among old people.

Over the last decade this important and influential interpretation of the economic status of the elderly population in Britain has been developed by social policy analysts, who argue that the socioeconomic status of older people has been deliberately manipulated by the state in order to remove the elderly from the labour market in times of labour surplus, to increase their financial dependence on the state, and to marginalize them as a social group.

This paper takes issue with this interpretation, and argues for a much more optimistic view of the changing socioeconomic status of the elderly. Theories of "structured dependency" rest on the explicit or implicit argument that elderly people have experienced a constriction of economic liberty in modern Britain because of the deliberate (or fortuitous) development of social welfare and employment policies. Much of the detailed research that has made use of the concept of structured dependency has, however, focused on the relatively small and exceptional sub- group of elderly people living in institutions, for whom the concept of dependency seems more immediately relevant. This may have biased the outlook of social policy analysts in their discussion of the much larger group of elderly who are economically and socially independent.

The economic status of the elderly is largely determined by four factors:

i) their employment status;
ii) their access to state pensions and welfare benefits;
iii) their access to private savings (especially occupational pensions); and
iv) their receipt of familial support.

Any attempt to determine either the direction of or the reason for changes in economic status must look at these four factors separately.

The greatest change in the economic circumstances of older people in twentieth century Britain has been the reduced importance of employment income and the rise of the state pension. "Structured dependency" theories view these twin developments as damaging, because they associate independence with employment, and so interpret rising retirement rates as evidence of enforced marginalization. But the evidence is ambiguous; the receipt of an old age pension, an income which is a statutory right guaranteed by the taxable capacity of the state, may give individuals greater financial security and independence than they experienced when dependent on the vagaries of the labour market.

In addition, changes in the participation rates of the elderly can be due to a reduction in the demand for the labour of this section of the population, a reduction in the labour services supplied by the elderly, or some combination of the two. Changes in these supply and demand factors depend on the physical and mental capacity of individuals for work and the requirements of employment, but also on the personal choice of individuals, the marginal productivity of other groups in the labour market, the flexibility of remuneration schemes, and institutional factors such as pension scheme regulations. In much of the writing on the dependent elderly, the assumption has been made that retirement has become more common at an earlier age because of a reduction in the demand for elderly workers. There are, however, no theoretical grounds for preferring demand- to supply-side explanations for the growth of retirement, and the evidence available on changes in the retirement process in twentieth century Britain is ambiguous. Only if it is assumed that independence is a function of employment income can the idea of increased dependency be automatically supported. It seems more plausible, however, that elderly people as a whole have more secure incomes and are less marginalized as consumers today than they were at earlier times in this century.

The Structured Dependency of the Elderly: A Critical Note
Paul Johnson