Labour market segmentation and differing retirement arrangements

Abstract

Labour market segmentation theory was developed as an explanation for ongoing poverty among some groups of people. According to this theory, the problem is in the structure of the work world, rather than in individual characteristics. The research in this paper examines the relevance of this theory for retirement arrangements. An investigation of 154 retirement arrangements within 132 companies, and interviews with 486 retirees, yielded evidence that there are differences not only in the resulting pension amounts, but also in the types of plans, and the terms therein, offered to workers, by segment. Thus, the segmentation that began in the labour force is extended into retirement. As well as making a contribution to labour market segmentation theory by providing empirical evidence of the differences in retirement arrangements for the various segments, this study offers an alternative method for the operationalization of the segments.