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Boosting the Employment Rate of Older Men and Women

  • V. Vandenberghe


European countries need to expand employment among older individuals. Many papers have examined this issue from different angles. However, very few seem to have considered its gender dimension properly, despite evidence that lifting the overall senior employment rate requires significantly raising that of women older than 50. The key issue examined by this paper is whether employers are willing to employ more older workers, in particular older women. The answer depends to a large extent on the ratio of older individuals’ productivity to their cost to employers. To address this question we tap into a unique firm-level panel of Belgian data to produce robust evidence on the causal effect of age/gender on productivity and labour costs. We take advantage of the panel structure to identify age/gender-related differences from within-firm variation. Moreover, inspired by recent developments in the production function estimation literature, we address the problem of endogeneity of the age/gender mix, using a structural production function estimator (Olley & Pakes, 1996; Levinsohn & Petrin, 2003) alongside IV-GMM methods where lagged value of labour inputs are used as instruments. Our results indicate a small negative impact of larger shares of older men on the productivity-labour cost ratio. An increment of 10%-points of in their share causes a 0.17 to 0.69%-point contraction. However, the main result is that the equivalent handicap with older women is larger, ranging from 1.3 to 2.0%-points. This is not good news for older women’s employability. And the vast services industry does not seem to offer working conditions that mitigate older women’s disadvantage, on the contrary.

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Article provided by Springer in its journal De Economist.

Volume (Year): 159 (2011)
Issue (Month): 2 (June)
Pages: 159-191

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Handle: RePEc:kap:decono:v:159:y:2011:i:2:p:159-191
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  1. Saint-Paul, Gilles, 2010. "Does the welfare state make older workers unemployable?," CEPREMAP Working Papers (Docweb) 1003, CEPREMAP.
  2. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
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  4. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  5. Z, Griliches & Jacques Mairesse, 1997. "Production Functions : The Search for Identification," Working Papers 97-30, Centre de Recherche en Economie et Statistique.
  6. Adriaan Kalwij & Frederic Vermeulen, 2008. "Health and labour force participation of older people in Europe: What do objective health indicators add to the analysis?," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 619-638.
  7. D. Borowczyk Martins & V. Vandenberghe, 2010. "Using Firm-Level Data to Assess Gender Wage Discrimination in the Belgian Labour Market," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  8. Mitchell, Olivia S & Fields, Gary S, 1984. "The Economics of Retirement Behavior," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 84-105, January.
  9. Thierry Lallemand & François Rycx, 2009. "Are Young and Old WorkersS Harmful for Firm Productivity ?," Working Papers CEB 09-002.RS, ULB -- Universite Libre de Bruxelles.
  10. Michal Myck, 2007. "Wages and Ageing: Is There Evidence for the "Inverse-U Profile"?," Discussion Papers of DIW Berlin 724, DIW Berlin, German Institute for Economic Research.
  11. Jan Ours & Lenny Stoeldraijer, 2011. "Age, Wage and Productivity in Dutch Manufacturing," De Economist, Springer, vol. 159(2), pages 113-137, June.
  12. Benoit Dostie, 2011. "Wages, Productivity and Aging," De Economist, Springer, vol. 159(2), pages 139-158, June.
  13. Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
  14. Hellerstein, J-K & Neumark, D, 1995. "Sex, Wages, and Productivity : an Empirical Analysis of Israeli, Firm-Level Data," Papers 9501, Michigan State - Econometrics and Economic Theory.
  15. Fitzenberger, Bernd & Schnabel, Reinhold & Wunderlich, Gaby, 2001. "The gender gap in labor market participation and employment: a cohort analysis for West Germany," ZEW Discussion Papers 01-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. Pierre Pestieau & Mathieu Lefèbvre & Alain Jousten & Sergio Perelman, 2008. "The Effects of Early Retirement on Youth Unemployment: The Case of Belgium," IMF Working Papers 08/30, International Monetary Fund.
  17. repec:oup:restud:v:58:y:1991:i:2:p:277-97 is not listed on IDEAS
  18. Patrick Aubert & Bruno Crépon, 2003. "La productivité des salariés âgés : une tentative d'estimation," Économie et Statistique, Programme National Persée, vol. 368(1), pages 95-119.
  19. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November.
  20. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  21. Malmberg, Bo & Lindh, Thomas & Halvarsson, Max, 2005. "Productivity consequences of workforce ageing - Stagnation or a Horndal effect?," Arbetsrapport 2005:17, Institute for Futures Studies.
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  26. Peracchi, Franco & Welch, Finis, 1994. "Trends in Labor Force Transitions of Older Men and Women," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 210-42, April.
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