nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒09‒02
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Working Hours Flexibility and Older Workers' Labor Supply By Gielen, A. C.
  2. What Explains Trends in Labor Force Participation of Older Men in the United States? By David M. Blau; Ryan Goodstein
  3. Trends in Worker Displacement Penalties in Japan: 1991-2005 By Michael Bognanno; Ryo Kambayashi
  4. Wages and Ageing: Is There Evidence for the "Inverse-U" Profile? By Michal Myck
  5. Gender, Older People and Social Exclusion. A Gendered Review and Secondary Analysis of the Data By Emilia Del Bono; Caroline Gunnell; Ruth Hancock; Lavinia Parisi; Emanuela Sala
  6. State Dependence, Duration Dependence and Unobserved Heterogeneity inthe Employment Transitions of the over-50s By Lorenzo Cappellari; Richard Dorsett; Getinet Haile

  1. By: Gielen, A. C. (Tilburg University, Center for Economic Research)
    Abstract: This paper studies the presence of hours constraints on the UK labor market and its effect on older workers labor supply, both at the extensive and the intensive margin. Using panel data for the period 1991-2004, the results from a competing risks model show that over-employed male workers can freely reduce working hours with their current employer prior to full retirement. However, some over-employed women are observed to leave the labor market early due to hours constraints. Despite the fact that hours constraints may shorten working lives of older women, this paper presents some explorative results which illustrate that increasing working hours flexibility does not seem to increase older workers total labor supply as is often suggested.
    Keywords: Labor supply;hours constraint;mobility;retirement.
    JEL: J22 J31 J63
    Date: 2007
  2. By: David M. Blau (Ohio State University and IZA); Ryan Goodstein (University of North Carolina at Chapel Hill)
    Abstract: After nearly a full century of decline, the Labor Force Participation Rate (LFPR) of older men in the United States leveled off in the 1980s, and began to increase in the late 1990s. We use a time series of cross sections from 1962 to 2005 to model the LFPR of men aged 55-69, with the aim of explaining these trends. We investigate the effects of changes in Social Security rules, lifetime earnings, pension coverage, wages, health, health insurance, and the educational composition of the labor force. Our results indicate that the decline in the LFPR from the 1960s through the 1980s cannot be explained by any of these factors. The recent increase in the LFPR of older men can be explained by changes in the composition of the older male population away from high school dropouts and toward college attendees and graduates. Changes in Social Security may have contributed to the recent increase as well, but the results for Social Security are sensitive to specification.
    Keywords: labor force participation, retirement, social security, pensions
    JEL: J26 J21
    Date: 2007–08
  3. By: Michael Bognanno (Temple University and IZA); Ryo Kambayashi (Hitotsubashi University)
    Abstract: We examine the period from 1991 to 2005 to document the effects of a changing Japanese labor market on trends in the cost of job change. During this period, job change penalties and the extent to which they were age-related grew. Evidence is also found of a diminishing specificity in human capital (in industry, occupation and firm size) for job changers in the Japanese labor market. As might be expected, older workers and workers leaving the largest firms suffered the largest wage losses from job change. Older workers were also harmed more by involuntary job separations. In percentage terms, young females have larger wage losses than young males but older females have smaller losses than older males. This pattern is masked in considering only the overall effect of gender on the cost of job change.
    Keywords: job displacement, Japan
    JEL: J31 J41 J63 J6
    Date: 2007–07
  4. By: Michal Myck (DIW Berlin, IFS and IZA)
    Abstract: How individual wages change with time, and how they are expected to change as individuals grow older, is one of crucial determinants of their behaviour on the labour market including their decision to retire. The profile of individual hourly wages has for a long time been assumed to follow an "inverse-U" path, although there has been little work specifically concerning the age-wage profile and documenting it convincingly. The focus of this paper is the relationship between age and wages with special attention given to individuals close to retirement. The analysis is presented in a comparative context for Britain and Germany looking at two longitudinal datasets (BHPS and GSOEP respectively) for years 1995-2004. It stresses the importance of cohort effects and selection out of employment which seem crucial in determining the downward-sloping part of the "inverse-U" profile observed in most cross-sections. There seems to be little evidence that wages fall with age.
    Keywords: wage dynamics, ageing, selection
    JEL: J14 J21 J31 C14
    Date: 2007–08
  5. By: Emilia Del Bono (Institute for Social and Economic Research); Caroline Gunnell (Epping Forest Primary Care Trust); Ruth Hancock (Department of Health and Human Sciences, University of Essex); Lavinia Parisi (Institute for Social and Economic Research); Emanuela Sala (Institute for Social and Economic Research)
    Abstract: This study describes the conditions of older men and women in the UK and highlights gender differences in their degree of social inclusion, here defined with respect to: (i) use of services, (ii) provision of care, and (iii) participation in social networks. Using the 2001 Sample of Anonimised Records (SARs) we look at the current situation of older people (here defined as people aged 65 and over) in Britain. We document important gender imbalances in the age structure and marital status of older people, but point out that these differences will become less marked in the future according to the Government Actuary's projections. Using data from the General Household Survey we then investigate the extent of gender differences in older people's degree of social inclusion. We find evidence that differences among older men and women with respect to service utilization, provision of informal care and participation in social networks are often the consequence of differences in marital status and living arrangements rather than gender differences per se.
    Date: 2007–07
  6. By: Lorenzo Cappellari (Department of Economics, Universite Cattolica di Milano); Richard Dorsett (Policy Studies Institute); Getinet Haile (Policy Studies Institute)
    Abstract: This paper examines employment transitions among men and women in the UK aged between 50 and the state pension age. We begin by examining the issue of duration dependence, using standard duration models. We then use a fourth order Markov model to estimate quarterly transitions while allowing for potential endogeneity of initial conditions. The results reject exogeneity of initial conditions and show the importance of both duration dependence and state dependence. This implies there is the potential for any individual to become trapped in non-employment and, ideally, policy should intervene as soon as an individual begins a period of non-employment.
    Keywords: labour force transitions, labour market
    Date: 2007–07

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