DISTANCE TO RETIREMENT AND OLDER WORKERS‘ EMPLOYMENT: THE CASE FOR DELAYING THE RETIREMENT AGE

This paper presents empirical evidence and a theoretical foundation in favor of the view that the retirement age decision affects older workers' employment prior to retirement. To the extent that there are search frictions on the labor market, the return on jobs is determined by their expected duration: The time to retirement is then key to understanding older workers' employment. Countries with a retirement age of 60 are indeed characterized by lower employment rates for workers aged 55–59. Based on the French Labor Force Survey, we show that the likelihood of employment is significantly affected by the distance to retirement, in addition to age and other relevant variables. We then extend McCall's job search model by explicitly integrating life‐cycle features with the retirement decision. Using simulations, we show that the distance effect in interaction with the generosity of unemployment benefits and the depressed demand for older workers explains the low rate of employment just before the eligibility age for the Social Security pension. Finally, we show that implementing actuarially fair schemes not only extends the retirement age, but also encourages a more intensive job search by older unemployed workers. (JEL: J22, J26, H55)     

Computer Use and Employment Status of Older Workers — An Analysis Based on Individual Data

Abstract. This paper analyses the determinants of computer use by male employees and estimates the impact of computer use on the employment status for older workers, based on individual data from the German Socio‐Economic Panel. In line with previous research on the diffusion of new technologies, a strong and negative relationship between the age of workers and computer use is found. The correlation of educational level and occupational status on computer use is significantly positive. However, the estimated impact of computer use on the change in employment status of older workers becomes insignificant when controlling for individual and firm‐specific characteristics.     

A Note on Immigrant Representation in Temporary Agency Work and Self‐employment in Sweden

Abstract. This is a note on the immigrant representation in two forms of atypical employment in Sweden: self‐employment and temporary agency work. The employment rate among non‐western immigrants is substantially lower than among natives and using register data for the population in Sweden who were employed in 1999, we find that immigrants are over‐represented in both these forms of atypical employment. Immigrants from Asia are over‐represented in both forms of employment, whereas immigrants from South America are over‐represented among temporary agency workers but underrepresented among the self‐employed. These findings can be interpreted as an indication of that temporary agency work and self‐employment are used as alternatives to regular employment by groups in which unemployment is high.     

On Government‐Subsidized Training Programs for Older Workers

We analyze the impact of subsidized training programs for older workers. We apply a dynamic matching approach using German registry data. We find that subsidized training improves the probability to remain in paid employment by approximately 2.5 percentage points in the 2 years following treatment. The impact on benefit claims is small and largely insignificant. Effects are more pronounced for part‐time workers, for long‐duration program participants, and for workers older than 55 years. The results suggest that the main driver of these outcomes is postponed retirement, potentially because of improved job satisfaction.     

Atypical Employment Relations and Government Policy in Europe

Abstract. This paper analyses government policy towards the two major forms of atypical work in Europe: part-time employment and temporary work. It is submitted that the policies implemented promote the volume of marginal part-time employment and temporary work. The policies aiming at more temporary jobs did not result in additional employment; they merely resulted in a redistribution of unemployment and a shift in the recruitment patterns in the direction of subsidised temporary jobs. Too much emphasis on numerical flexibility is not without danger. Countries run the risk that employers will not pay sufficient attention to the source of their long-term flexibility, manpower training. I t is argued that regular part-time work is an alternative for uncertain temporary jobs, Its potential expansion is considerable. Some recommendations are put forward to promote regular part-time jobs and improve the position of flexible part-time workers and temporary workers.     

A Theory of the Firm with Non‐binding Employment Contracts

This paper examines an employment relation in which individual workers enjoy some bargaining power vis‐a‐vis the firm although they are not unionized. The main elements of the situations studied here are that the employment contracts are non‐binding across periods of production and that the firm has opportunities to replace workers. The paper analyzes a dynamic model in which the processes of contracting and recontracting between the firm and its workers are intertwined with the dynamic evolution of the firm's workforce. The analysis of the model is somewhat complicated because the employment level is a nondegenerate state variable that evolves over time and is affected by past decisions. The main analytical results characterize certain important equilibria: the profit maximizing and stationary equilibria. The unique stationary equilibrium is markedly inefficient: it exhibits inefficient over‐employment and the steady state wages coincide with the workers' reservation wage. It confirms earlier results derived by Stole and Zwiebel (1996a, b) in the context of a static model and shows that they are very robust even when the firm has nearly frictionless hiring opportunities. In contrast, in the profit maximizing equilibrium the outcome is nearly efficient and the wage exhibits a mark‐up over the reservation wage.     

Sectoral Queuing in a Transitional Economy: The Case of Nicaragua in the 1990s

Abstract. Using microdata from the 1993 and 1998 Living Standards Measurement Survey (LSMS) of Nicaragua, this paper analyzes the propensity of informal sector workers to queue for formal sector employment as well as employer behavior related to the selection of individuals from the informal sector queue. The nature of the queue is also examined over time to determine informal sector workers’ response to national market‐based reforms. The results indicate that informal workers do indeed queue for formal sector employment and the nature of the queue has become more pronounced during the time period under consideration.     

Stereotypical Inferences as Mediators of Age Discrimination: The Role of Competence and Warmth

Drawing on theories of stereotype content and role congruity, this research investigated the role of stereotypes for employment discrimination against older candidates. Study 1 investigated the content of stereotypes about older workers, focusing on warmth and competence as the two core dimensions in social judgement. As predicted, older workers were perceived as less competent but warmer than younger workers. Studies 2 and 3 investigated how these stereotypes interact with job requirements to predict age bias in an experimental setting. Further, they tested if warmth‐ and competence‐related stereotypical inferences mediate the relation between candidate age and selection bias. Results showed that age bias was robust. Older candidates were discriminated against, even if the job primarily required warmth‐related qualities, and independently of evaluators' own age or professional experience in human resources. Moreover, age bias was mediated by competence‐related stereotypical inferences. Age bias was also mediated by inferences related to warmth but those inferences were opposite to the high‐warmth older worker stereotype identified in Study 1 . Implications of the findings for theoretical approaches to age discrimination and for organizational practice designed to combat age discrimination are discussed.     

Do Business Cycles Have Long‐Term Impact for Particular Cohorts?

Do business cycle fluctuations and changes in employment produce cohorts with permanently different labour market attachment? Taking an explicit cohort perspective and based on Danish register data, we find noticeable age dependent persistence in employment rates at the cohort level. Younger workers tend to be more exposed to business cycle fluctuations than older workers, but importantly they recover more quickly than older workers for whom persistence is stronger. Moreover, following the employment trajectories of cohorts, no cohorts have been permanently ‘scarred’ in terms of employment due to a sequence of adverse shocks. Finally, an explicit account of overlapping cohorts is shown to affect assessments of persistence in aggregate employment rates.     

Comparing three alternative types of employment with permanent full-time work: How do employment contract and perceived job conditions relate to health complaints?

Previous research has found that alternative employment arrangements are associated with both impaired and improved well-being. Since such inconsistencies are likely to derive from the type of employment contract as well as the characteristics of the job, this paper compares permanent full-time work with forms of alternative employment (permanent part-time, fixed-term and on-call work) in order to investigate how different employment contracts and perceptions of job conditions relate to individual well-being. This study contributes to the literature by addressing several questions. Different forms of alternative employment are distinguished and individual background characteristics that might be intertwined with the employment contract are controlled for. Moreover, the scope of this study extends to the effects of perceived job conditions, and possible interactive effects with type of employment are tested. Analyses of questionnaire data from 954 Swedish healthcare workers show that perceptions of the job (job insecurity, job control and demands), but not the type of employment contract, predicted health complaints. However, type of employment interacted with perceptions of job insecurity, in that insecurity was associated with impaired well-being among permanent full-time workers, while no relationship was found for on-call or core part-time employees. Despite the absence of interactions between employment contract and job demands or job control, it can be concluded that knowledge about the relationship between alternative employment arrangements and the well-being of workers can be enhanced when the combined effects of employment contract and job conditions are studied.     

Cardiac measures of stress in British prison officers

Abstract

Previous research has found that alternative employment arrangements are associated with both impaired and improved well-being. Since such inconsistencies are likely to derive from the type of employment contract as well as the characteristics of the job, this paper compares permanent full-time work with forms of alternative employment (permanent part-time, fixed-term and on-call work) in order to investigate how different employment contracts and perceptions of job conditions relate to individual well-being. This study contributes to the literature by addressing several questions. Different forms of alternative employment are distinguished and individual background characteristics that might be intertwined with the employment contract are controlled for. Moreover, the scope of this study extends to the effects of perceived job conditions, and possible interactive effects with type of employment are tested. Analyses of questionnaire data from 954 Swedish healthcare workers show that perceptions of the job (job insecurity, job control and demands), but not the type of employment contract, predicted health complaints. However, type of employment interacted with perceptions of job insecurity, in that insecurity was associated with impaired well-being among permanent full-time workers, while no relationship was found for on-call or core part-time employees. Despite the absence of interactions between employment contract and job demands or job control, it can be concluded that knowledge about the relationship between alternative employment arrangements and the well-being of workers can be enhanced when the combined effects of employment contract and job conditions are studied.     

How the Risk of Displacement for Older Workers Has Changed

Using Blinder–Oaxaca decomposition and relying on the consistent design of the Displaced Worker Survey since 1996, this study analyses various factors contributing to the rising dislocation of older workers, such as changes in tenure, industry mix, educational attainment, and labor force participation. Although in the past older workers were less prone to displacement compared with prime‐age workers, this paper finds that older workers are now more likely to be displaced, conditional on education, manufacturing industry, and tenure. Declining tenure, a higher incidence of displacement in manufacturing, and a higher labor force participation among older workers largely explain the convergence of displacement rates among older and prime‐age workers.     

Technology,Employment and Wages

This paper provides a critical review of the impact of technical change on the structure of relative wages and employment, and considers some alternative explanations for the immiseration of low skilled workers. In the absence of any clear and distinguishing policy blueprint, the paper also seeks to clarify the major issues raised by our discussion for employment policy.     

The Transition from Temporary to Permanent Employment: Evidence from Tuscany

Abstract. In this paper, by distinguishing between the decisions made by the workers and those made by the firms, we provide a probabilistic evaluation of the transition from temporary to permanent employment in a regional context. Specifically, by exploiting a multinomial nested logit strategy of estimation, we find that the transition to a permanent job is far from certain, especially for women and older workers.     

Efficiency Wage,Fixed Employment Costs,and Dual Labour Markets

The standard efficiency wage‐based explanation of labour market dualism hinges on the existence of differences in monitoring across sectors. The paper proposes fixed employment costs as an alternative source of wage differentials for homogeneous workers. It shows that firms with larger fixed costs pay higher wages in order to elicit more effort from their workers, and tend to have higher capital/labour ratio and labour productivity. The model generates both involuntary unemployment and involuntary confinement in the secondary sector: high effort–high wage jobs are preferred to low effort–low wage jobs and either are preferred to unemployment. The proposed framework can also account for the various types of treatment of marginal jobs in primary sector firms envisaged by Doeringer and Piore (Internal Labour Markets and Manpower Analysis, 1971). In particular, an increase in fixed costs beyond a certain level may induce primary sector firms to restructure, segment production, and enter the secondary sector, thus converting their jobs into secondary jobs. From a welfare point of view, we cannot state in general the desirability of subsidizing fixed employment costs; however, we show that an employment subsidy financed by a wage tax is able to increase employment with no loss in terms of production.     

DO FINANCIAL INCENTIVES AFFECT FIRMS’ DEMAND FOR DISABLED WORKERS?

A number of OECD countries aim to encourage work integration of disabled persons using quota policies. For instance, Austrian firms must provide at least one job to a disabled worker per 25 nondisabled workers and are subject to a tax if they do not. This “threshold design” provides causal estimates of the noncompliance tax on disabled employment if firms do not manipulate nondisabled employment; a lower and upper bound on the causal effect can be constructed if they do. Results indicate that firms with 25 nondisabled workers employ about 0.04 (or 12%) more disabled workers than without the tax; firms do manipulate employment of nondisabled workers but the lower bound on the employment effect of the quota remains positive; employment effects are stronger in low‐wage firms than in high‐wage firms; and firms subject to the quota of two disabled workers or more hire 0.08 more disabled workers per additional quota job. Moreover, increasing the noncompliance tax increases excess disabled employment, whereas paying a bonus to overcomplying firms slightly dampens the employment effects of the tax.     

Post‐Migratory Employment Prospects: Evidence from Finland

This paper analyses the role which migration plays in improving post‐migratory employment prospects of migrants (long‐distance) within Finland, by examining the employment status of migrants and non‐migrants at the end of the migration interval. The analysis is based on micro data from the period 1985–90. The results from multivariate analyses suggest that migration by itself has not augmented the likelihood of getting a job, even though tabular comparisons of re‐employment rates between migrants and non‐migrants suggest this to be the case. Migration, however, has an indirect role in enhancing job search outcomes as it moves workers to labour markets characterized by more favourable employment opportunities.     

Assessing the Effects of the ‘Mobility Lists’ Programme by Flexible Duration Models

The ‘Mobility Lists’ programme handles collective redundancies, and combines income support to eligible dismissed employees with benefits to employers who hire them. Benefits vary according to dismissing firm size and are greater for older workers. We focus on the differential effects of programme treatments on the probability of moving from unemployment into permanent jobs. We specify flexible duration models in order to estimate the profile of differential effects over time. Older workers, enjoying longer packages of benefits, have significantly lower chances of moving to employment. Differential effects vary with time and are higher when younger workers approach the expiry of benefits.     

Skill Acquisition in the Informal Economy and Schooling Decisions: Evidence from Emerging Economies

Informal jobs offer skill acquisition opportunities that may facilitate a future switch to formal employment for young workers. In this sense, informal training on the job may be a viable alternative to formal schooling in an economy with a large and diverse informal sector. In this paper, I investigate if these considerations are relevant for the schooling decisions of young individuals using panel data for 17 Latin American countries and micro‐level data for Turkey. Specifically, I ask if the prevalence of informal jobs distorts schooling attainment. I concentrate on three measures of schooling outcomes: (1) secondary education enrollment rate; (2) out‐of‐school rate for lower secondary school; and (3) tertiary education graduation rate. I find that the secondary education enrollment rate is negatively correlated with the size of the informal economy, whereas the out‐of‐school rate is positively correlated. Moreover, the tertiary education graduation rates tend to fall as the informal employment opportunities increase. This means that informal training on the job may be crowding out school education in developing countries. Policies that can potentially affect the size of the informal sector should take into consideration these second‐round effects on aggregate schooling outcomes.