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Labor Market Rigidities and the Employment Behavior of Older Workers

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  • David Blau
  • Tetyana Shvydko

Abstract

It is often asserted that the labor market is characterized by rigidities that make it difficult for older workers to carry out their desired trajectory from work to retirement. One potentially important source of rigidity is the restrictions on hours of work imposed by firms, but such rigidities are difficult to measure directly. The authors explore two variables that may serve as proxies for flexibility in hours at the employer level: the shares of older workers and young women in the employer's work force. The authors use matched worker-firm data from the Survey of Income and Program Participation and the Longitudinal Employer Household Dynamics study for the period 1990–2004 to analyze the effects of these variables on the job separation propensity of workers aged 45–69. Results indicate that older workers employed in firms with greater shares of older workers and young female workers have a lower propensity for job separation. These findings provide indirect but suggestive evidence of the importance of labor market rigidities in shaping employment decisions of older workers.

Suggested Citation

  • David Blau & Tetyana Shvydko, 2011. "Labor Market Rigidities and the Employment Behavior of Older Workers," ILR Review, Cornell University, ILR School, vol. 64(3), pages 464-484, April.
  • Handle: RePEc:sae:ilrrev:v:64:y:2011:i:3:p:464-484
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    2. Tobias Laun & Johanna Wallenius, 2016. "Social Insurance and Retirement: A Cross-Country Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 22, pages 72-92, October.
    3. Nicole Maestas & Kathleen Mullen & David Powell, 2013. "The Effect of Local Labor Demand Conditions on the Labor Supply Outcomes of Older Americans," Discussion Papers 13-014, Stanford Institute for Economic Policy Research.
    4. Etienne Lalé, 2018. "Turbulence and the employment experience of older workers," Quantitative Economics, Econometric Society, vol. 9(2), pages 735-784, July.
    5. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    6. Rowena A Pecchenino & Julie Byrne, 2017. "Heigh Ho, Heigh Ho:The Way We (Would Like to) Work Now," Economics Department Working Paper Series n282-17.pdf, Department of Economics, National University of Ireland - Maynooth.
    7. Richard Rogerson & Johanna Wallenius, 2009. "Retirement in a Life Cycle Model of Labor Supply with Home Production," Working Papers wp205, University of Michigan, Michigan Retirement Research Center.
    8. Peng, Fei & Anwar, Sajid & Kang, Lili, 2017. "New technology and old institutions: An empirical analysis of the skill-biased demand for older workers in Europe," Economic Modelling, Elsevier, vol. 64(C), pages 1-19.
    9. Julie Byrne & Rowena A. Pecchenino, 2019. "Heigh Ho, Heigh Ho: flexible labor contracts with real option characteristics," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 54(1), pages 25-34, January.
    10. Rogerson, Richard & Wallenius, Johanna, 2016. "Retirement, home production and labor supply elasticities," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 23-34.

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    More about this item

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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