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Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France

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  • Baguelin, Olivier
  • Remillon, Delphine

Abstract

In a context of population aging, reducing early exit from the labor force is a major challenge. In this domain, the role of unemployment insurance (UI) is probably underestimated and its statistical assessment remains insufficient. And yet, when considering a possible separation, it is likely that workers who are close to retirement, and thus their employers if they wish to reduce their workforce, care about UI. In particular, they are likely to care about whether or not, potential benefit duration is long enough to cover the time until retirement. This paper provides evidence in support of this hypothesis for some worker profiles. The analysis is conducted using data from the French employment agency over the period 2001 to 2005. It is based on a natural experiment: on January 1, 2003, the potential benefit duration of UI entrants was sharply reduced. Econometric analysis of the age patterns of UI inflow reveals that the age incentives provided by UI rules greatly influence labor market behaviors: dismissals of insiders close to retirement are often scheduled so that they can receive benefits until retirement. We estimate that the reform increased the mean age at job termination of workers dismissed close to retirement by 4months. Our findings confirm that UI rules have an impact on inflow into unemployment and that UI is viewed by some employers and/or some workers as an early retirement scheme rather than as insurance against the risk of job loss. Thus, addressing the issue of older workers' participation in the labor market requires consideration of the joint impact of UI and retirement system rules.

Suggested Citation

  • Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
  • Handle: RePEc:eee:labeco:v:30:y:2014:i:c:p:245-264
    DOI: 10.1016/j.labeco.2014.04.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kyyrä, Tomi & Pesola, Hanna, 2017. "Long-Term Effects of Extended Unemployment Benefits for Older Workers," IZA Discussion Papers 10839, Institute for the Study of Labor (IZA).
    2. Olivier Baguelin, 2016. "Dismissals scheduling and the employment of older workers," Economics Bulletin, AccessEcon, vol. 36(4), pages 2443-2453.
    3. repec:spr:jlabrs:v:52:y:2018:i:1:d:10.1186_s12651-018-0240-1 is not listed on IDEAS
    4. Kyyrä, Tomi & Pesola, Hanna, 2017. "Long-term effects of extended unemployment benefits for older workers," Working Papers 89, VATT Institute for Economic Research.

    More about this item

    Keywords

    Unemployment insurance; Unemployment inflow; Benefit duration; Older workers; Early retirement;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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