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Too Old to Work, Too Young to Retire?

Author

Listed:
  • Ichino, Andrea

    (Dipartimento di Scienze Economiche, Universitá di Bologna, Bologna, Italy)

  • Schwerdt, Guido

    (Department Human Capital and Innovation, Ifo Institute for Economic Research, Munich, Germany)

  • Winter-Ebmer, Rudolf

    (Department of Economics, University of Linz, Linz, Austria, and Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

  • Zweimüller, Josef

    (Institute for Empirical Research in Economics, University of Zurich, Zurich, Switzerland)

Abstract

We use firm closure data for Austria 1978-1998 to investigate the effect of age on employment prospects. We rely on exact matching to compare workers displaced by firm closure with similar non-displaced workers. We then use a difference-in-difference strategy to analyze employment and earnings of older relative to prime-age workers in the displacement and non-displacement groups. Results suggest that immediately after plant closure the old have lower re-employment probabilities as compared to prime-age workers but later they catch up. While among the young the employment prospects of the displaced remain persistently different from those of the non-displaced, among the old the effect of displacement fades away, and actually disappears even immediately after plant closure when the effect of tenure based severance payment is controlled for. Our evidence suggests that increasing the retirement age does not necessarily produce individuals who are "too old to work but too young to retire".

Suggested Citation

  • Ichino, Andrea & Schwerdt, Guido & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2007. "Too Old to Work, Too Young to Retire?," Economics Series 220, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:220
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    File URL: https://irihs.ihs.ac.at/id/eprint/1804
    File Function: First version, 2007
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    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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