nep-age New Economics Papers
on Economics of Ageing
Issue of 2009‒03‒22
nine papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Labour Incentive Reforms in Pre-Retirement Age in Austria By Narazani E; Shima I
  2. Labor Force Participation of Older Males in Korea: 1955-2005 By Chulhee Lee
  3. Ageing, Health and Life Satisfaction of the Oldest Old: An Analysis for Germany By Gwozdz, Wencke; Sousa-Poza, Alfonso
  4. Cooperation and Competition in Intergenerational Experiments in By Gary Charness; MARIE-CLAIRE VILLEVAL
  5. Displacement of Older Workers: Re-employment, Hastened Retirement, Disability, or Other Destinations? By Finnie, Ross; Gray, David
  6. Rémunération à l’ancienneté et ajustement du marché du travail (Seniority-based Pay and Labour Market Adjustment) By Béjaoui, Ali; Montmarquette, Claude
  7. Livelihood and Care of the Elderly: Determinants of Public Attitudes in Japan By Bernd Hayo; Hiroyuki Ono
  8. The Effects of Population Structure on Employment and Productivity By Hervé Boulhol
  9. The Age Effect in Entrepreneurship: Founder’s Tenure, Firm Performance, and the Economic Environment By Marco Cucculelli; Giacinto Micucci

  1. By: Narazani E; Shima I
    Abstract: In view of the political debate on the future sustainability of pensions system in Austria and given the low participation of older worker in the labour market, in this paper we try to shed light on employment and retirement behaviour while a combination of reduction in pension benefits along with income support is provided. We find out that reforms characterized by moderately generous income support while working along with lower pension entitlement in early retirement yield higher social welfare compared to the current system. The labour supply response signals increase under the proposed reforms among middle-income males, in the age category 55-60, whereas these reforms seem to be ineffective for women. These findings emphasize the importance of introducing pension reforms complemented with tax-benefits policies such that the former remove the disincentives to retire earlier and the later enhance the employment of workers in pre-retirement age.
    Keywords: supply, discrete choice models, guaranteed minimum income, retirement, older worker
    Date: 2009–03–06
  2. By: Chulhee Lee
    Abstract: This study estimates the labor force participation rate (LFPR) of older males in Korea from 1955 to 2005, and analyzes the effects of several determining factors on labor force participation decisions at older ages. The LFPR of older men increased substantially from the mid-1960s to the late-1990s. This pattern is in sharp contrast to the historical experiences of most OECD countries, where the LFPR of older males declined rapidly over the last century. The rise in the LFPR of older males in Korea between 1965 and 1995 is largely explained by the dramatic increase in the labor-market activity of the rural elderly population. The results of regression analyses suggest that the acceleration of population aging in rural areas due to the selective out-migration of younger persons was the major cause of the sharp increase in the LFPR of older males. It is likely that the relative decline of the rural economy in the course of industrialization made it increasingly difficult for the rural elderly population to save for retirement.
    JEL: J26
    Date: 2009–03
  3. By: Gwozdz, Wencke (University of Hohenheim); Sousa-Poza, Alfonso (University of Hohenheim)
    Abstract: This analysis uses data from the German Socio-Economic Panel (GSOEP) and the Survey on Health, Ageing and Retirement in Europe (SHARE) to assess the effect of ageing and health on the life satisfaction of the oldest old (defined as 75 and older). We observe a U-shaped relationship between age and levels of life satisfaction for individuals aged between 16 and approximately 65. Thereafter, life satisfaction declines rapidly and the lowest absolute levels of life satisfaction are recorded for the oldest old. This decline is primarily attributable to low levels of perceived health. Once cohort effects are also controlled for, life satisfaction remains relatively constant across the lifespan.
    Keywords: oldest old, health, life satisfaction
    JEL: I18 I19 J28
    Date: 2009–03
  4. By: Gary Charness (University of California, Santa Barbara); MARIE-CLAIRE VILLEVAL (CNRS, University of Lyon, IZA)
    Abstract: There is economic pressure towards the postponement of the retirement age, but employers are still reluctant to employ older workers. We investigate the comparative behavior of juniors and seniors in experiments conducted both onsite with the employees of two large firms and in a conventional aboratory environment with students and retirees. We show that seniors are no more risk averse than juniors and are typically more cooperative; both juniors and working seniors respond strongly to competition. The implication is that it may be beneficial to define additional incentives near the end of the career to motivate and retain older workers.
    Keywords: Age, performance, diversity, stereotypes, cooperation,
    Date: 2008–06–22
  5. By: Finnie, Ross; Gray, David
    Abstract: The central objective of this study is to investigate the income sources and patterns of prime-age and older workers who suffer a layoff from steady employment. We focus on a set of cohorts who are deemed to have a high degree of attachment to the labour force preceding the event of an involuntary separation. Using a unique data base that merges administrative data marking the job separation, we track all of their sources of income over an interval that spans four years prior to the separation to five years after the separation. Our empirical analysis includes an investigation of the frequency that a laid-off individual will receive income ex post from a given source, a typology analysis of the various configurations of income received, and an econometric analysis of the incidence of certain post-layoff income configurations. We find that in any given year, approximately 2 % of our sample of workers with stable employment histories experience a ‘visible’ layoff. During the first three post-layoff years, 77 % of the group of laid-off workers (aged 45-64 years old) have non-trivial labour market earnings, and 56-65 % of them depend on the labour market for their primary source of income. This group of workers does experience substantial income losses. During the post-layoff period, approximately 14-19 % of them file a subsequent claim for EI benefits, but few of them depend on the EI regime as the primary source of their income. Very few of these individuals draw on other types of social insurance benefits, such as CPP disability, social assistance, and workers’ compensation. The most common destination state for prime-age and older workers who have not yet reached retirement age are early retirement and continued labour market activity, albeit at much lower earnings. It is rare for them to draw on social insurance benefits, and we find little evidence that disability benefits and workers compensation are functioning as disguised unemployment benefits.
    Keywords: Post-layoff transitions, incidence of program usage, retirement behaviour, disability benefits, re-employment transitions
    JEL: J63 J65 J68 J26
    Date: 2009–03–13
  6. By: Béjaoui, Ali; Montmarquette, Claude
    Abstract: (English Abstract Follows) La manière dont le marché du travail s’ajuste au choc démographique est au centre des préoccupations des politiques du marché du travail. En effet, le vieillissement de la population pourrait affecter la capacité de l’économie à s’ajuster, non seulement au choc de vieillissement lui-même, mais aussi aux chocs engendrés par les cycles économiques, le commerce international et les changements technologiques (Kuhn, 2003). La présente étude contribue au débat portant sur la manière dont les entreprises s’ajustent à un environnement devenu de plus en plus turbulent. Entre autres, le salaire à l’ancienneté a été identifié comme l’un des facteurs qui pourraient freiner la capacité des entreprises à s’ajuster au marché, dans un contexte de vieillissement de la main-d’oeuvre. Cette étude se penche sur le recours aux emplois non standards (ou la flexibilité numérique) et l’adoption de la rémunération variable comme stratégies d’évitement du salaire à l’ancienneté. En utilisant des données uniques qui apparient les employeurs et les employés au niveau des établissements, nous avons estimé l’impact de la composition démographique des établissements sur le recours à l’une ou l’autre des stratégies de flexibilisation. Nous concluons que la composition démographique des établissements n’est pas associée à la probabilité de recours à la rémunération variable. Par contre, la proportion des travailleurs âgés (45 ans et plus) dans un établissement est associée positivement à la probabilité de recourir à la flexibilité numérique. De même, une complémentarité entre les deux stratégies de flexibilisation a été mise en évidence. Les implications politiques de ces résultats sont multiples. Si les entreprises continuent à avoir des difficultés à instaurer des systèmes de rémunération flexible, elles continueront de s’ajuster en recourant à la flexibilité numérique. Bien que cette flexibilité ait permis aux travailleurs âgés de combiner le travail avec une retraite progressive, aux femmes de combiner le travail avec les soins des enfants et des parents, et aux jeunes de combiner le travail et les études, elle peut avoir des effets néfastes à long terme. Cette stratégie de flexibilisation peut entraîner, à long terme, un sous investissement dans la formation, un manque d’épargne-retraite ainsi qu’une accentuation des inégalités salariales. Le défi de la nouvelle génération des politiques publiques consiste à identifier le compromis entre les incitatifs et les programmes d’activation qui permettrait d’atteindre un équilibre entre les impératifs économiques (la flexibilité) et les aspirations sociales (la sécurité). *** The labour market’s ability to adjust to the current demographic shock is a central concern for labour market policies. An aging population could affect the economy’s ability to adjust, not only to the aging population shock itself, but also to those associated with the business cycle, international trade and technological changes (Kuhn, 2003). This study contributes to discussions about the ways in which organizations adjust to such an increasingly turbulent environment. Among others, seniority-based pay has been identified as a factor that could potentially hinder an organization’s ability to adjust to the market, within the context of an aging workforce. This study focuses on the use of non-standard jobs (or numerical flexibility) and variable compensation as strategies to avoid seniority-based pay. Using unique data that match employers and employees at the mico level, we investigated the link between the demographic composition of workplaces and the adoption of either or both « flexibilization » strategies. Consequently, we conclude that there is no link between workplace demographics and the adoption of variable compensation. However, a high proportion of older workers (45 years and older) in the workplace is positively related to the use of numerical flexibility. Moreover, a complementarity in the use of both strategies emerged from our study. The implications of these results on policies are numerous. If organizations continue experiencing difficulties in resorting to flexible compensation, they will likely continue to adjust by relying on numerical flexibility. While this type of flexibility allows older workers to ease into retirement gradually, women to cope with both working and caring for children or aging parents, and youths to combine work and studies, it can also have detrimental effects. Over time, this flexibilzation strategy can lead to an underinvestment in training, a lack of savings for retirement and an increase in wage inequalities. The main challenge of the new generation of public policies lies in the identification of an effective compromise between incentives and activation programs that would allow a balance between economic imperatives (flexibility) and social aspirations (security).
    Keywords: marché du travail, rémunération, flexibilité et sécurité, vieillissement
    JEL: J26 J33 J81
    Date: 2009–03–13
  7. By: Bernd Hayo (Faculty of Business Administration and Economics, Philipps-University Marburg); Hiroyuki Ono (Faculty of Economics, Toyo University, 5-28-20 Hakusan Bunkyo-ku, 112-8606 Tokyo, Japan)
    Abstract: This study analyses public attitudes towards the degree of government involvement in ensuring the livelihood and care of the elderly in Japan. Using four waves of individual-level annual data from the Japanese General Social Survey collected over the period 2000-2005, we estimate ordered logit models with various explanatory variables based on the socio-demographic, economic, political, and social background of the respondents. Many significant factors are common for both livelihood and care specifications, their effects being qualitatively the same and in line with our prior expectations. The estimation results also show positive coefficients of year intercept dummies, implying an increase in support of a government-based system over time. Further investigation shows that this trend is caused by those who favour government redistribution policies becoming increasingly more consistent in their support for a government-based social security system in Japan.
    Keywords: Livelihood of elderly, care of elderly, public attitudes, aging societies, Japan
    JEL: H55 Z10
    Date: 2009
  8. By: Hervé Boulhol
    Abstract: The composition of the working-age population can influence aggregate employment and average productivity because both employment rates and productivity levels vary across population groups. This paper assesses the quantitative importance of the working-age population broken down by age, gender and education in explaining differences in employment and productivity levels across countries. Differences in population structure are found to contribute importantly to variations in both labour utilisation and productivity performances. Combining these effects in a mechanical way, differences in the composition of the working-age population account for around a third of the gap in GDP per capita for Europe (EU15) vis-à-vis the United States, mainly due to differences in educational attainment.<P>Les effets de la structure de la population sur l’emploi et la productivité<BR>La composition de la population d’âge actif peut influer sur le niveau global de l’emploi et sur la productivité moyenne car aussi bien les taux d’emploi que les niveaux de la productivité varient selon les groupes de population. Cette étude a pour objectif d’évaluer dans quelle mesure la structure de la population d’âge actif, en fonction de l’âge, du sexe et du niveau d’éducation, peut expliquer les différences de niveau d’emploi et de productivité entre pays. Les différences dans la structure de la population contribuent pour beaucoup aux écarts entre pays tant des niveaux d’utilisation de la main d’oeuvre que de la productivité. En combinant ces effets mécaniques, on observe que les différences dans la composition de la population d’âge actif expliquent pour environ un tiers l’écart de PIB par habitant de l’Europe (UE15) par rapport aux États-Unis, principalement du fait des différences de niveau d’éducation.
    Keywords: démographie, aggregate employment, emploi agrégé, qualité de l'emploi, quality of labour, labour productivity, productivité du travail, demographics
    JEL: E24 J10 J21 J31
    Date: 2009–03–17
  9. By: Marco Cucculelli; Giacinto Micucci
    Abstract: This paper tests the effect of founder’s tenure on firm performance by taking into account the impact of the changes occurring in the economic environment. We use a large dataset of founder-run firms that includes, in addition to financial data, company data directly collected through a survey of about 2,000 Italian firms. Unlike the negative relationship reported in most empirical papers, we found an inverted U-shaped relationship between founder-CEO tenure and firm performance. This relationship is strongly influenced by the characteristics of the environment in which the company competes: while experience plays a key role in fostering performance in less innovative- and less competitive sectors, a dynamic environment makes the performance of the firm less responsive to the benefits of founder tenure. From the viewpoint of policy, growing environment dynamism calls for greater efficiency of the market for corporate control, in order to assure a continued match between skills of CEOs and the external environment
    Keywords: ageing, entrepreneurship, founder-run firms, changing environment
    JEL: L25 J24 G34
    Date: 2009–03

This nep-age issue is ©2009 by Claudia Villosio. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.