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Too Old To Work, Too Young To Retire?

Author

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  • Andrea Ichino

    (UNIBO - Alma Mater Studiorum Università di Bologna = University of Bologna)

  • Guido Schwerdt
  • Rudolf Winter-Ebmer

    (JKU - University of Linz - Johannes Kepler Universität Linz)

  • Josef Zweimüller

    (UZH - Universität Zürich [Zürich] = University of Zurich)

Abstract

We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data, we show that old and young workers face similar displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. We interpret these findings using a search model with retirement as an absorbing state, that we calibrate to match the observed patterns. Our finding is that the dynamics of relative employment losses of old versus young workers after a displacement are mainly explained by different opportunities of transition into retirement. In contrast, differences in layoff rates and job offer arrival rates cannot explain these patterns. Our results support the idea that retirement incentives, more than weak labor demand, are responsible for the low employment rates of older workers.

Suggested Citation

  • Andrea Ichino & Guido Schwerdt & Rudolf Winter-Ebmer & Josef Zweimüller, 2014. "Too Old To Work, Too Young To Retire?," Working Papers hal-03460464, HAL.
  • Handle: RePEc:hal:wpaper:hal-03460464
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03460464
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    References listed on IDEAS

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    More about this item

    Keywords

    employment; age; plant closure;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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