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Too Old to Work, Too Young to Retire?

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Author Info

  • Ichino, Andrea

    (Dipartimento di Scienze Economiche, Universitá di Bologna, Bologna, Italy)

  • Schwerdt, Guido

    (Department Human Capital and Innovation, Ifo Institute for Economic Research, Munich, Germany)

  • Winter-Ebmer, Rudolf

    (Department of Economics, University of Linz, Linz, Austria, and Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

  • Zweimüller, Josef

    (Institute for Empirical Research in Economics, University of Zurich, Zurich, Switzerland)

Abstract

We use firm closure data for Austria 1978-1998 to investigate the effect of age on employment prospects. We rely on exact matching to compare workers displaced by firm closure with similar non-displaced workers. We then use a difference-in-difference strategy to analyze employment and earnings of older relative to prime-age workers in the displacement and non-displacement groups. Results suggest that immediately after plant closure the old have lower re-employment probabilities as compared to prime-age workers but later they catch up. While among the young the employment prospects of the displaced remain persistently different from those of the non-displaced, among the old the effect of displacement fades away, and actually disappears even immediately after plant closure when the effect of tenure based severance payment is controlled for. Our evidence suggests that increasing the retirement age does not necessarily produce individuals who are "too old to work but too young to retire".

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File URL: http://www.ihs.ac.at/publications/eco/es-220.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Institute for Advanced Studies in its series Economics Series with number 220.

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Length: 38 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:ihs:ihsesp:220

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Keywords: Aging; Employability; Plant closures; Matching;

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References

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