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Too Old to Work, Too Young to Retire?

Author

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  • 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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    References listed on IDEAS

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    Cited by:

    1. Mario Schnalzenberger & Rudolf Winter-Ebmer, 2008. "Layoff Tax and the Employment of the Elderly," NRN working papers 2008-04, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    2. Peter Huber & Michael Pfaffermayr, 2007. "The Anatomy of the Firm Size Distribution: The Evolution of its Variance and Skewness," WIFO Working Papers 295, WIFO.
    3. Narazani, Edlira & Shima, Isilda, 2009. "Labour incentive reforms in pre-retirement age in Austria," EUROMOD Working Papers EM1/09, EUROMOD at the Institute for Social and Economic Research.
    4. A. Zaiceva, 2007. "East-West migration and gender: Is there a "double disadvantage" vis-à-vis stayers?," Working Papers 608, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Emilia Del Bono & Andrea Weber & Rudolf Winter-Ebmer, 2012. "Clash Of Career And Family: Fertility Decisions After Job Displacement," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 659-683, August.
    6. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2010. "The Costs of Job Loss in Russia," IZA Discussion Papers 5415, Institute for the Study of Labor (IZA).
    7. Ichino, Andrea & Schwerdt, Guido & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2017. "Too old to work, too young to retire?," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 14-29.
    8. Francisca Bremberger & Rudolf Hochholzer & Peter Huber, 2016. "Labour Turnover, Employment Density and Employer Provided Training: Evidence from Vienna," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 2(1), pages 5-22, November.
    9. Jochen Michaelis & Martin Debus, 2011. "Wage and (un-)employment effects of an ageing workforce," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1493-1511, October.
    10. Boockmann, Bernhard & Fries, Jan & Göbel, Christian, 2012. "Specific measures for older employees and late career employment," ZEW Discussion Papers 12-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Manuella Baraton & Magali Beffy & Denis Fougère, 2011. "Une évaluation de l’effet de la réforme de 2003 sur les départs en retraite. Le cas des enseignants du second degré public," Économie et Statistique, Programme National Persée, vol. 441(1), pages 55-78.
    12. Schwerdt, Guido, 2011. "Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"," Labour Economics, Elsevier, vol. 18(1), pages 93-101, January.
    13. Tatsiramos, Konstantinos, 2010. "Job displacement and the transitions to re-employment and early retirement for non-employed older workers," European Economic Review, Elsevier, vol. 54(4), pages 517-535, May.
    14. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2013. "The wage and non-wage costs of displacement in boom times: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1184-1201.
    15. Ichino, Andrea & Schwerdt, Guido & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2013. "Too Old to Work, Too Young to Retire? Revised Version of Working Paper 220, Economics Series, October 2007," Economics Series 302, Institute for Advanced Studies.
    16. Isilda Mara & Edlira Narazani, 2011. "Labour-incentive reforms at preretirement age in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(4), pages 481-510, November.
    17. Tibor Hanappi, 2012. "Retirement Behaviour in Austria: Incentive Effects on Old-Age Labor Supply," NRN working papers 2012-13, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    18. H. Lehmann & A. Muravyev & T. Razzolini & A. Zaiceva, 2011. "The Wage and Non-wage Costs of Displacement: Evidence from Russia," Working Papers wp734, Dipartimento Scienze Economiche, Universita' di Bologna.
    19. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute for the Study of Labor (IZA).
    20. Zaiceva, Anzelika, 2010. "East-West migration and gender: Is there a differential effect for migrant women?," Labour Economics, Elsevier, vol. 17(2), pages 443-454, April.
    21. Schnalzenberger, Mario & Winter-Ebmer, Rudolf, 2009. "Layoff tax and employment of the elderly," Labour Economics, Elsevier, vol. 16(6), pages 618-624, December.
    22. Schwerdt, Guido & Ichino, Andrea & Ruf, Oliver & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2010. "Does the color of the collar matter? Employment and earnings after plant closure," Economics Letters, Elsevier, vol. 108(2), pages 137-140, August.

    More about this item

    Keywords

    Aging; Employability; Plant closures; Matching;

    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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