Background Amidst rapidly ageing European populations there is a growing need to develop pension systems that help support well-being in later life. Using German reunification as a unique case study of large and mostly exogenous pension increases in East but not in West Germany, we examine whether increases in pension income are associated with changes in health and well-being among pensioners in East vs West Germany. Methods Our data come from the nationally representative German Socio-Economic Panel survey covering years 1984–2005 for West Germany, with data for East available from 1992. The analysis sample includes a cohort of retired individuals at the time of reunification, resulting in 15 991 observations. We use linear fixed effects models to quantify the within-person association between pensions and health and life satisfaction in East Germany – where pensions became more generous – vs West Germany where pensions remained stable. Results We find a small but robust conditional association of increasing pension income on life satisfaction, such that for every 10% increase in pension income, life satisfaction increases by 0.03 points on a 0–10 scale (95% CI 0.01 to 0.06) in East versus West Germany, with effects stronger for men. We find no effects on health satisfaction. Our results are robust to accounting for health-related attrition. Conclusions Although the association between life satisfaction and increased pension income is modest, the substantial pension increases observed during the convergence period imply that the cumulative impact over time may correspond to a meaningful improvement in well-being at the population level.
Simpson et al. (Tue,) studied this question.