04 Oct 2023

Education and income have different effects on the life cycle in Germany

The likelihood that certain life events such as marriage, having children, divorce, or death will occur at a given age for German citizens varies by gender, level of education, income, and place of residence

How do personal characteristics such as gender, education, or income affect the probability of certain life events occurring? A Leibniz Institute for Financial Research SAFE study examined these likelihoods using German Socio-Economic Panel (SOEP) data. The two authors’ study, Raimond Maurer and Sehrish Usman, shows that education and income significantly influence the likelihood of getting married, having children, and average life expectancy.

For example, men are more likely to die young than women. However, a high income significantly reduces the risk of death for both sexes. On average, a 65-year-old man with an annual net income of less than 15,001 euros (*) will live to 70, while a 65-year-old man with an income of more than 42,000 euros per year will live to 79. The life expectancy of low-income men is thus nine years less relative to better-paid men.

“For women, this difference is slightly less pronounced at six years,” says author Prof. Raimond Maurer, Professor of Investment, Portfolio Management and Pension Finance at Goethe University Frankfurt and SAFE Fellow. A low-income 65-year-old woman today would live to 79, while a high-income 65-year-old woman would live to 85. “It is also interesting to note that married people have the lowest mortality risk compared to single, divorced, widowed, or separated people,” adds Maurer.

The likelihood of late marriage increases with educational attainment

The SAFE study also shows that the probability of late marriage increases with the level of education. For example, women who have not completed vocational training or a (technical) university degree marry at an average age of 25, women with a (technical) university degree or vocational training marry at 27, and women with a university degree marry at 31. The difference in the average age at marriage is thus six years. For men, the average age at marriage is 30, 29, and 32 for the different education groups.

The SAFE study also shows differences between education groups in the likelihood of having children. The lower the level of education, the earlier women and men have children. As expected, married couples are more likely to have children compared cohabiting couples. The regional differences are also significant. “We find that West Germans are less likely to have a child than East Germans,” says researcher Sehrish Usman, co-author of the study.

For their paper, Maurer and Usman looked only at the likelihood of certain events occurring throughout the lives of different groups of German residents. Thus, the research paper presents interesting empirical findings without delving into the underlying causes for the observed variations.

(*) Information on income distribution

When asking about income, the three income groups (“low income” up to 15,000 euros per year, “middle income” from 15,001 euros to 42,000 euros, “high income” more than 42,000 euros) are based on the annual net household income, adjusted for household size. On this basis, the sample is distributed among the three categories as follows: low income 7.85 percent (total 56,231 persons), medium income 50.35 percent (360,685 persons), and high income 41.80 percent (299,445 persons).

Download SAFE Working Paper No. 399

Scientific Contact

Prof. Dr. Raimond Maurer

SAFE Fellow