Hiring older workers and employing older workers: German evidence

Using German establishment data, we examine the relationship between delayed compensation, training, and hiring of older workers. Both those establishments that delay compensation and those with greater human capital requirements are less likely to hire older workers. We demonstrate that the routinely used control for the age of existing workers is endogenous and that instrumenting provides stronger evidence for the role of delayed compensation. Specifically, delayed compensation is simultaneously a negative determinant of hiring older workers but a positive determinant of employing older workers and, thus, more clearly associated with “employing older workers but not hiring them.”