Peer Effects on Job Satisfaction from Exposure to Elderly Workers

The Elderly Employment Stabilization Law revised in 2006 helped the government to increase elderly employment. Although there has been a discussion of whether the re-employment of elderly workers substitutes or complements the employment of young workers, there are few studies that examine potential peer effects of the former group on the latter's productivity or motivation in the workplace. Note that there might be knowledge spillovers from elderly workers to peers, especially younger ones (positive peer effects) but the presence of unmotivated elderly workers might demoralize peers (negative peer effects). This paper investigates such peer effects from the exposure to elderly workers using the employee satisfaction survey of a Japanese firm. We show that elderly workers do not have significant peer effects on coworkers' satisfaction on average. However, the effects are heterogeneous depending on the ability of the elderly workers, reflected in their wages, and the age and job levels of their peers. Namely, regular workers are more satisfied when they work with elderly workers who receive higher wages. Coworkers in their 30s and 40s receive more training and those in their 50s are more satisfied when they work with elderly workers. In contrast, first line managers are less satisfied by the allocation of elderly workers, especially those with high levels of ability. This paper contributes to the discussion on the efficient assignment of elderly workers.