Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/30885.html
   My bibliography  Save this paper

Hiring older employees: Do incentives of early retirement channels matter?

Author

Listed:
  • Ilmakunnas, Pekka
  • Ilmakunnas, Seija
Abstract
We examine the impact of a Finnish reform in the 1990s that restricted the use of particular early retirement channels, unemployment pension and individual early retirement, and simultaneously changed the rules of firm size related experience rating in disability pensions. Our emphasis is on how the reforms affected the incentives of the firms to hire older employees. In a simple model we illustrate how forward-looking behaviour of firms affects the value of a new hire. Simulations with the model illustrate that although the reform in the unemployment pension in principle affected particular age groups, 53-54 year olds in the case of unemployment pension and 55-57 year olds in the case of individual early retirement, the impacts on hiring may have been felt also in other, younger, age groups. On the other hand, the effects of both reforms are likely to have varied by firm size. In a differences-indifferences-in-differences analysis with firm-level data we show that the impact of the reforms has been to increase the probability of hiring especially in the age group 51-52 and especially in the largest firms.

Suggested Citation

  • Ilmakunnas, Pekka & Ilmakunnas, Seija, 2011. "Hiring older employees: Do incentives of early retirement channels matter?," MPRA Paper 30885, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30885
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/30885/1/MPRA_paper_30885.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Behaghel, Luc & Crépon, Bruno & Sédillot, Béatrice, 2008. "The perverse effects of partial employment protection reform: The case of French older workers," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 696-721, April.
    2. Saint-Paul, Gilles, 2009. "Does the welfare state make older workers unemployable?," CEPR Discussion Papers 7490, C.E.P.R. Discussion Papers.
    3. Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 1034-1076, September.
    4. repec:adr:anecst:y:2007:i:85:p:02 is not listed on IDEAS
    5. Adams, Scott J., 2004. "Age discrimination legislation and the employment of older workers," Labour Economics, Elsevier, vol. 11(2), pages 219-241, April.
    6. Scott J. Adams & John S. Heywood, 2007. "The Age of Hiring and Deferred Compensation: Evidence from Australia," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 174-190, June.
    7. Tomi Kyyrä & Ralf A. Wilke, 2007. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 154-182, March.
    8. Garibaldi, Pietro & Oliveira Martins, Joaquim & van Ours, Jan (ed.), 2010. "Ageing, Health, and Productivity: The Economics of Increased Life Expectancy," OUP Catalogue, Oxford University Press, number 9780199587131.
    9. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Leibniz Centre for European Economic Research.
    10. Heywood, John S. & Siebert, W. Stanley, 2009. "Understanding the Labour Market for Older Workers: A Survey," IZA Discussion Papers 4033, Institute of Labor Economics (IZA).
    11. Kirsten Daniel & W. S. Siebert, 2005. "Does employment protection reduce the demand for unskilled labour?," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 197-222.
    12. Garen, John & Berger, Mark & Scott, Frank, 1996. "Pensions, non-discrimination policies, and the employment of older workers," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(4), pages 417-429.
    13. Frank A. Scott & Mark C. Berger & John E. Garen, 1995. "Do Health Insurance and Pension Costs Reduce the Job Opportunities of Older Workers?," ILR Review, Cornell University, ILR School, vol. 48(4), pages 775-791, July.
    14. Martins, Pedro S. & Novo, Alvaro A. & Portugal, Pedro, 2009. "Increasing the Legal Retirement Age: The Impact on Wages, Worker Flows and Firm Performance," IZA Discussion Papers 4187, Institute of Labor Economics (IZA).
    15. Seija Ilmakunnas & Mervi Takala, 2005. "Promoting Employment among Ageing Workers: Lessons from Successful Policy Changes in Finland," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(4), pages 674-692, October.
    16. Hutchens, Robert, 1986. "Delayed Payment Contracts and a Firm's Propensity to Hire Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 439-457, October.
    17. Hakola, Tuulia & Uusitalo, Roope, 2005. "Not so voluntary retirement decisions? Evidence from a pension reform," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2121-2136, December.
    18. Luojia Hu, 2003. "The Hiring Decisions and Compensation Structures of Large Firms," ILR Review, Cornell University, ILR School, vol. 56(4), pages 663-681, July.
    19. Kyyrä, Tomi & Ollikainen, Virve, 2008. "To search or not to search? The effects of UI benefit extension for the older unemployed," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2048-2070, October.
    20. repec:dau:papers:123456789/7971 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pekka Ilmakunnas & Seija Ilmakunnas, 2014. "Age segregation and hiring of older employees: low mobility revisited," International Journal of Manpower, Emerald Group Publishing Limited, vol. 35(8), pages 1090-1115, October.
    2. Boockmann Bernhard & Brändle Tobias, 2019. "Coaching, Counseling, Case-Working: Do They Help the Older Unemployed Out of Benefit Receipt and Back Into the Labor Market?," German Economic Review, De Gruyter, vol. 20(4), pages 436-468, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pekka Ilmakunnas & Seija Ilmakunnas, 2014. "Age segregation and hiring of older employees: low mobility revisited," International Journal of Manpower, Emerald Group Publishing Limited, vol. 35(8), pages 1090-1115, October.
    2. John S. Heywood & Uwe Jirjahn, 2016. "The hiring and employment of older workers in Germany: a comparative perspective [Die Beschäftigung und Neueinstellung älterer Arbeitnehmer in Deutschland: Eine vergleichende Perspektive]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(4), pages 349-366, December.
    3. John S. Heywood & Uwe Jirjahn, 2015. "The German Labor Market for Older Workers in Comparative Perspective," Research Papers in Economics 2015-02, University of Trier, Department of Economics.
    4. Pfeifer, Christian, 2009. "An Intra-Firm Perspective on Wage Profiles and Employment of Older Workers with Special Reference to Human Capital and Deferred Compensation," Hannover Economic Papers (HEP) dp-413, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    5. Vigtel, Trond Christian, 2018. "The retirement age and the hiring of senior workers," Labour Economics, Elsevier, vol. 51(C), pages 247-270.
    6. Stephan Humpert, 2012. "Age and Gender Differences in Job Opportunities," Working Paper Series in Economics 235, University of Lüneburg, Institute of Economics.
    7. Christian Pfeifer, 2009. "Adjustment of Deferred Compensation Schemes, Fairness Concerns, and Hiring of Older Workers," Working Paper Series in Economics 151, University of Lüneburg, Institute of Economics.
    8. Heywood, John S. & Siebert, W. Stanley, 2009. "Understanding the Labour Market for Older Workers: A Survey," IZA Discussion Papers 4033, Institute of Labor Economics (IZA).
    9. Messe, P.J., 2011. "Taxation of early retirement windows and delaying retirement: The French experience," Economic Modelling, Elsevier, vol. 28(5), pages 2319-2341, September.
    10. Garcia, Maria Teresa Medeiros & Fontainha, Elsa & Passos, José, 2017. "Hiring older workers: The case of Portugal," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 71-77.
    11. Daniel, Kirsten & Heywood, John S., 2007. "The determinants of hiring older workers: UK evidence," Labour Economics, Elsevier, vol. 14(1), pages 35-51, January.
    12. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.
    13. Jennifer Kunz & Laura Michele Ludwig, 2022. "Curbing Discriminating Human Resource Practices—A Microfounded Perspective," Schmalenbach Journal of Business Research, Springer, vol. 74(3), pages 307-344, September.
    14. Ichino, Andrea & Schwerdt, Guido & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2017. "Too old to work, too young to retire?," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 14-29.
    15. Arnaud Chéron & Jean‐Olivier Hairault & François Langot, 2011. "Age‐Dependent Employment Protection," Economic Journal, Royal Economic Society, vol. 121(557), pages 1477-1504, December.
    16. Simon Rabaté, 2017. "Can I Stay or Should I Go? Mandatory Retirement and Labor Force Participation of Older Workers," Working Papers halshs-01521150, HAL.
    17. Kyyrä, Tomi & Pesola, Hanna, 2020. "Long-term effects of extended unemployment benefits for older workers," Labour Economics, Elsevier, vol. 62(C).
    18. Ichino, Andrea & Schwerdt, Guido & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2013. "Too Old to Work, Too Young to Retire? Revised Version of Working Paper 220, Economics Series, October 2007," Economics Series 302, Institute for Advanced Studies.
    19. Pawel Chrostek & Krzysztof Karbownik & Michal Myck, 2024. "Labor Market Externalities of Pre-Retirement Employment Protection," CESifo Working Paper Series 11078, CESifo.
    20. P.J. Messe, 2011. "Taxation of early retirement windows and delaying retirement: The French experience," Post-Print hal-04455419, HAL.

    More about this item

    Keywords

    early retirement; hiring; pension reform;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:30885. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.