Earnings Losses of Displaced Older Workers: Accounting for the Retirement Option
AbstractIn this paper I estimate the magnitude of earnings losses faced by workers who are displaced when over the age of 50. This is potentially complicated by the self-selection of older individuals out of the labour force and into activities such as retirement, preventing observation of their potential earnings losses. Using data from the Survey of Labour and Income Dynamics (1993-2004), I use a Heckman selection model that accounts for individualsâ€™ departure from the labour force following displacement. Results indicate that self-selection is an important factor to consider when studying the earnings of older workers but does not bias estimates of earnings losses due to displacement. Further, the results suggest that workers over 50 do not face larger earnings losses upon displacement than 35-49 year olds. Losses are only slightly larger than that experienced by 25-34 year olds. Consistent with the existing literature, those workers displaced over 50 with high tenure on the lost job experience the largest earnings losses.
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Bibliographic InfoPaper provided by UBC Department of Economics in its series CLSRN Working Papers with number clsrn_admin-2009-17.
Length: 37 pages
Date of creation: 16 Feb 2009
Date of revision: 16 Feb 2009
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Layoffs; Wage Level; Wage Structure; Retirement; Retirement Policies;
Find related papers by JEL classification:
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-02-22 (Economics of Ageing)
- NEP-ALL-2009-02-22 (All new papers)
- NEP-LAB-2009-02-22 (Labour Economics)
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