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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
    DOI: 10.1177/001979391106400303
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    Cited by:

    1. Richard Rogerson & Johanna Wallenius, 2018. "Household Time Use Among Older Couples: Evidence and Implications for Labor Supply," 2018 Meeting Papers 90, Society for Economic Dynamics.
    2. Blake, Hélène & Sangnier, Marc, 2011. "Senior activity rate, retirement incentives, and labor relations," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 5, pages 1-32.
    3. Raquel Fonseca & Simon Lord & Simon C. Parker, 2020. "Self-Employment at Older Ages in Canada," Cahiers de recherche / Working Papers 2003, Chaire de recherche sur les enjeux économiques intergénérationnels / Research Chair in Intergenerational Economics.
    4. Boockmann, Bernhard & Fries, Jan & Göbel, Christian, 2018. "Specific measures for older employees and late career employment," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 159-174.
    5. 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.
    6. 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.
    7. C Machado & Miguel Portela, 2014. "Hours of work and retirement behaviour," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.
    8. Etienne Lalé, 2018. "Turbulence and the employment experience of older workers," Quantitative Economics, Econometric Society, vol. 9(2), pages 735-784, July.
    9. 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.
    10. Richard Rogerson & Johanna Wallenius, 2019. "Household Time Use among Older Couples: Evidence and Implications for Labor Supply Parameters," The Quarterly Journal of Economics, Oxford University Press, vol. 134(2), pages 1079-1120.
    11. 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.
    12. 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.
    13. 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.
    14. James Carlopio & Michael Harvey & Timothy Kiessling, 2012. "A key to prosperity in hypercompetitive markets: organizational “hyperflexibility”," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 24(2), pages 189-200.
    15. 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.
    16. Rogerson, Richard & Wallenius, Johanna, 2016. "Retirement, home production and labor supply elasticities," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 23-34.
    17. Elisabetta Magnani, 2012. "Vertical disintegration and training: evidence from a matched employer–employee survey," Journal of Productivity Analysis, Springer, vol. 38(2), pages 199-217, October.
    18. Elisabetta Magnani, 2012. "Older Workers' Training Opportunities in Times of Workplace Innovation," Working Papers 201205, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.

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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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