IDEAS home Printed from https://ideas.repec.org/p/rsi/irersi/15.html
   My bibliography  Save this paper

Graying and staying on the job: The welfare implications of employment protection for older workers

Author

Listed:
  • Todd Morris
  • Benoit Dostie

Abstract

We study the welfare implications of employment protection for older workers, exploiting recent bans on mandatory retirement across Canadian provinces. Using linked employer-employee tax data, we show that the bans cause large and similar reductions in job separation rates and retirement hazards at age 65, with further reductions at higher ages. The effects vary substantially across industries and firms, and around two-fifths of the adjustments occur between ban announcement and implementation dates. We find no evidence that the demand for older workers falls, but the welfare effects are mediated by spillovers on savings behavior, workplace injuries, and spousal retirement timing.

Suggested Citation

  • Todd Morris & Benoit Dostie, 2023. "Graying and staying on the job: The welfare implications of employment protection for older workers," Cahiers de recherche / Working Papers 15, Institut sur la retraite et l'épargne / Retirement and Savings Institute.
  • Handle: RePEc:rsi:irersi:15
    as

    Download full text from publisher

    File URL: https://ire.hec.ca/wp-content/uploads/2023/09/cahier_IRE_15_graying_staying_job_protection_older_workers.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. MacKinnon, James G. & Webb, Matthew D., 2020. "Randomization inference for difference-in-differences with few treated clusters," Journal of Econometrics, Elsevier, vol. 218(2), pages 435-450.
    2. Etgeton, Stefan & Fischer, Björn & Ye, Han, 2023. "The effect of increasing retirement age on households’ savings and consumption expenditure," Journal of Public Economics, Elsevier, vol. 221(C).
    3. M. Shannon & D. Grierson, 2004. "Mandatory retirement and older worker employment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(3), pages 528-551, August.
    4. Frimmel, Wolfgang & Horvath, Thomas & Schnalzenberger, Mario & Winter-Ebmer, Rudolf, 2018. "Seniority wages and the role of firms in retirement," Journal of Public Economics, Elsevier, vol. 164(C), pages 19-32.
    5. James G. MacKinnon & Matthew D. Webb, 2018. "The wild bootstrap for few (treated) clusters," Econometrics Journal, Royal Economic Society, vol. 21(2), pages 114-135, June.
    6. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-380, October.
    7. David Autor & Andreas Kostøl & Magne Mogstad & Bradley Setzler, 2019. "Disability Benefits, Consumption Insurance, and Household Labor Supply," American Economic Review, American Economic Association, vol. 109(7), pages 2613-2654, July.
    8. Lindeboom, Maarten & Montizaan, Raymond, 2020. "Disentangling retirement and savings responses," Journal of Public Economics, Elsevier, vol. 192(C).
    9. Luc Behaghel & David M. Blau, 2012. "Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 41-67, November.
    10. Lalive, Rafael & Parrotta, Pierpaolo, 2017. "How does pension eligibility affect labor supply in couples?," Labour Economics, Elsevier, vol. 46(C), pages 177-188.
    11. Hernaes, Erik & Markussen, Simen & Piggott, John & Vestad, Ola L., 2013. "Does retirement age impact mortality?," Journal of Health Economics, Elsevier, vol. 32(3), pages 586-598.
    12. Daron Acemoglu & Joshua D. Angrist, 2001. "Consequences of Employment Protection? The Case of the Americans with Disabilities Act," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 915-957, October.
    13. MacKinnon, James G. & Nielsen, Morten Ørregaard & Webb, Matthew D., 2023. "Cluster-robust inference: A guide to empirical practice," Journal of Econometrics, Elsevier, vol. 232(2), pages 272-299.
    14. Fitzpatrick, Maria D. & Moore, Timothy J., 2018. "The mortality effects of retirement: Evidence from Social Security eligibility at age 62," Journal of Public Economics, Elsevier, vol. 157(C), pages 121-137.
    15. Hans Bloemen & Stefan Hochguertel & Jochem Zweerink, 2017. "The causal effect of retirement on mortality: Evidence from targeted incentives to retire early," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 204-218, December.
    16. Julian Vedeler Johnsen & Kjell Vaage & Alexander Willén, 2022. "Interactions in Public Policies: Spousal Responses and Program Spillovers of Welfare Reforms," The Economic Journal, Royal Economic Society, vol. 132(642), pages 834-864.
    17. Jordà , Òscar & Dube, Arindrajit & Girardi, Daniele & Taylor, Alan, 2023. "A Local Projections Approach to Difference-in-Differences Event Studies," CEPR Discussion Papers 18141, C.E.P.R. Discussion Papers.
    18. Melvin Stephens, 2002. "Worker Displacement and the Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 504-537, July.
    19. Kuhn, Andreas & Staubli, Stefan & Wuellrich, Jean-Philippe & Zweimüller, Josef, 2020. "Fatal attraction? Extended unemployment benefits, labor force exits, and mortality," Journal of Public Economics, Elsevier, vol. 191(C).
    20. Håkan Selin, 2017. "What happens to the husband’s retirement decision when the wife’s retirement incentives change?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 432-458, June.
    21. Staubli, Stefan & Zweimüller, Josef, 2013. "Does raising the early retirement age increase employment of older workers?," Journal of Public Economics, Elsevier, vol. 108(C), pages 17-32.
    22. Raj Chetty & John N. Friedman & Søren Leth-Petersen & Torben Heien Nielsen & Tore Olsen, 2014. "Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1141-1219.
    23. Derek Messacar & Petr Kocourek, 2019. "Pathways to Retirement, Well-Being, and Mandatory Retirement Rules: Evidence from Canadian Reforms," Journal of Labor Research, Springer, vol. 40(3), pages 249-275, September.
    24. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2019. "The Effect of Minimum Wages on Low-Wage Jobs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1405-1454.
    25. Andrea Ichino & Regina T. Riphahn, 2005. "The Effect of Employment Protection on Worker Effort: Absenteeism During and After Probation," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 120-143, March.
    26. Johannes Geyer & Clara Welteke, 2021. "Closing Routes to Retirement for Women: How Do They Respond?," Journal of Human Resources, University of Wisconsin Press, vol. 56(1), pages 311-341.
    27. Ayako Kondo & Hitoshi Shigeoka, 2017. "The Effectiveness of Demand-Side Government Intervention to Promote Elderly Employment: Evidence from Japan," ILR Review, Cornell University, ILR School, vol. 70(4), pages 1008-1036, August.
    28. Warman, Casey & Worswick, Christopher, 2010. "Mandatory Retirement Rules and the Retirement Decisions of University Professors in Canada," Labour Economics, Elsevier, vol. 17(6), pages 1022-1029, December.
    29. Paolo Sestito & Eliana Viviano, 2018. "Firing costs and firm hiring: evidence from an Italian reform," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 101-130.
    30. Milligan, Kevin, 2003. "How do contribution limits affect contributions to tax-preferred savings accounts?," Journal of Public Economics, Elsevier, vol. 87(2), pages 253-281, February.
    31. Daron Acemoglu & Matthew O. Jackson, 2017. "Social Norms and the Enforcement of Laws," Journal of the European Economic Association, European Economic Association, vol. 15(2), pages 245-295.
    32. David Roodman & James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2019. "Fast and wild: Bootstrap inference in Stata using boottest," Stata Journal, StataCorp LP, vol. 19(1), pages 4-60, March.
    33. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    34. Franca Glenzer & Pierre-Carl Michaud & Stefan Staubli, 2023. "Frames, Incentives, and Education: Effectiveness of Interventions to Delay Public Pension Claiming," CIRANO Working Papers 2023s-05, CIRANO.
    35. Bellés Obrero, Cristina & Jimenez-Martin, Sergi & Ye, Han, 2022. "The Effect of Removing Early Retirement on Mortality," IZA Discussion Papers 15577, Institute of Labor Economics (IZA).
    36. David H. Autor & John J. Donohue & Stewart J. Schwab, 2006. "The Costs of Wrongful-Discharge Laws," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 211-231, May.
    37. David Neumark & Ian Burn & Patrick Button, 2019. "Is It Harder for Older Workers to Find Jobs? New and Improved Evidence from a Field Experiment," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 922-970.
    38. Joanna Lahey, 2008. "State Age Protection Laws and the Age Discrimination in Employment Act," Journal of Law and Economics, University of Chicago Press, vol. 51(3), pages 433-460, August.
    39. Antoine Bozio & Clémentine Garrouste & Elsa Perdrix, 2021. "Impact of later retirement on mortality: Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1178-1199, May.
    40. Nielsen, Nick Fabrin, 2019. "Sick of retirement?," Journal of Health Economics, Elsevier, vol. 65(C), pages 133-152.
    41. Adams, Scott J., 2004. "Age discrimination legislation and the employment of older workers," Labour Economics, Elsevier, vol. 11(2), pages 219-241, April.
    42. M. Shannon & D. Grierson, 2004. "Mandatory retirement and older worker employment," Canadian Journal of Economics, Canadian Economics Association, vol. 37(3), pages 528-551, August.
    43. James G. MacKinnon & Matthew D. Webb, 2019. "Wild Bootstrap Randomization Inference for Few Treated Clusters," Advances in Econometrics, in: The Econometrics of Complex Survey Data, volume 39, pages 61-85, Emerald Group Publishing Limited.
    44. Antoine Bozio & Clémentine Garrouste & Elsa Perdrix, 2021. "Impact of later retirement on mortality: Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1178-1199, May.
    45. Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
    46. Richard V. Burkhauser & Joseph F. Quinn, 1983. "Is Mandatory Retirement Overrated? Evidence from the 1970s," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 337-358.
    47. Itzik Fadlon & Torben Heien Nielsen, 2021. "Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 1-30, July.
    48. Anikó Bíró & Réka Branyiczki & Péter Elek, 2022. "The effect of involuntary retirement on healthcare use," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1012-1032, June.
    49. Clémentine Garrouste & Elsa Perdrix, 2022. "Is there a consensus on the health consequences of retirement? A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 841-879, September.
    50. Orley Ashenfelter & David Card, 2002. "Did the Elimination of Mandatory Retirement Affect Faculty Retirement?," American Economic Review, American Economic Association, vol. 92(4), pages 957-980, September.
    51. David Neumark & Wendy A. Stock, 1999. "Age Discrimination Laws and Labor Market Efficiency," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 1081-1110, October.
    52. Hallberg, Daniel & Johansson, Per & Josephson, Malin, 2015. "Is an early retirement offer good for your health? Quasi-experimental evidence from the army," Journal of Health Economics, Elsevier, vol. 44(C), pages 274-285.
    53. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    54. Johannes Hagen, 2018. "The effects of increasing the normal retirement age on health care utilization and mortality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(1), pages 193-234, January.
    55. Stephen E. Snyder & William N. Evans, 2006. "The Effect of Income on Mortality: Evidence from the Social Security Notch," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 482-495, August.
    56. Arthur Seibold, 2021. "Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities," American Economic Review, American Economic Association, vol. 111(4), pages 1126-1165, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan C. van Ours, 2022. "How Retirement Affects Mental Health, Cognitive Skills and Mortality; An Overview of Recent Empirical Evidence," De Economist, Springer, vol. 170(3), pages 375-400, August.
    2. Clémentine Garrouste & Elsa Perdrix, 2022. "Is there a consensus on the health consequences of retirement? A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 841-879, September.
    3. Eibich, Peter & Goldzahl, Léontine, 2021. "Does retirement affect secondary preventive care use? Evidence from breast cancer screening," Economics & Human Biology, Elsevier, vol. 43(C).
    4. Todd Morris, 2022. "The unequal burden of retirement reform: Evidence from Australia," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 592-619, April.
    5. Esteban Garcia-Miralles & Jonathan M. Leganza, 2021. "Public Pensions and Private Savings," CEBI working paper series 21-06, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    6. Antoine Bozio & Clémentine Garrouste & Elsa Perdrix, 2021. "Impact of later retirement on mortality: Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1178-1199, May.
    7. Mattia Filomena & Matteo Picchio, 2023. "Retirement and health outcomes in a meta‐analytical framework," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1120-1155, September.
    8. Barschkett, Mara & Geyer, Johannes & Haan, Peter & Hammerschmid, Anna, 2022. "The effects of an increase in the retirement age on health — Evidence from administrative data," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    9. Terhi Ravaska, 2023. "Do reduced working hours for older workers have health consequences and prolong work careers?," Working Papers 6, Finnish Centre of Excellence in Tax Systems Research.
    10. Kyyrä, Tomi & Pesola, Hanna, 2020. "Long-term effects of extended unemployment benefits for older workers," Labour Economics, Elsevier, vol. 62(C).
    11. Nicolas R. Ziebarth, 2018. "Social Insurance and Health," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 57-84, Emerald Group Publishing Limited.
    12. Mohamed Ali Ben Halima & Camille Ciriez & Malik Koubi & Ali Skalli, 2021. "Retarder l’âge d’ouverture des droits à la retraite provoque-t-il un déversement de l’assurance-retraite vers l’assurance-maladie ? L’effet de la réforme des retraites de 2010 sur l’absence-maladie," TEPP Research Report 2021-13, TEPP.
    13. Zhaoxue Ci, 2022. "Does raising retirement age lead to a healthier transition to retirement? Evidence from the U.S. Social Security Amendments of 1983," Health Economics, John Wiley & Sons, Ltd., vol. 31(10), pages 2229-2243, October.
    14. Mohamed Ali Ben Halima & Camille Ciriez & Malik Koubi & Ali Skalli, 2022. "Retarder l’âge d’ouverture des droits à la retraite provoque-t-il un déversement de l’assurance-retraite vers l’assurance-maladie ? L’effet de la réforme des retraites de 2010 sur l’absence-maladie," Working Papers hal-03509628, HAL.
    15. Johan Saeverud, 2024. "The Impact Of Social Security Eligibility And Pension Wealth On Retirement," CEBI working paper series 05-24, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    16. Matteo Picchio & Jan C. van Ours, 2020. "Mental Health Effects of Retirement," De Economist, Springer, vol. 168(3), pages 419-452, September.
    17. Kuusi, T. & Martikainen, P. & Valkonen, T., 2020. "The influence of old-age retirement on health: Causal evidence from the Finnish register data," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    18. García-Miralles, Esteban & Leganza, Jonathan M., 2024. "Joint retirement of couples: Evidence from discontinuities in Denmark," Journal of Public Economics, Elsevier, vol. 230(C).
    19. Frimmel, Wolfgang & Pruckner, Gerald J., 2020. "Retirement and healthcare utilization," Journal of Public Economics, Elsevier, vol. 184(C).
    20. Matthew D. Webb, 2023. "Reworking wild bootstrap‐based inference for clustered errors," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 839-858, August.

    More about this item

    Keywords

    employment protection; retirement; welfare; active and passive savings responses; health effects; spousal spillovers;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rsi:irersi:15. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lee Boyle (email available below). General contact details of provider: https://edirc.repec.org/data/ireheca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.