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The Effectiveness of Government Intervention to Promote Elderly Employment: Evidence from Elderly Employment Stabilization Law

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  • Ayako Kondo
  • Hitoshi Shigeoka

Abstract

Since the pension eligibility age started to rise in 2001, there had been a gap between the eligibility age for full pension benefits and the prevailing retirement age in Japan. To fill the gap, the government of Japan revised the Elderly Employment Stabilization Law (EESL): starting from 2006, employers are legally obliged to introduce a system to continue employment up to the pension eligibility age. This paper examines the effect of this legal enforcement on elderly men's labor supply and employment status, by comparing the affected cohorts and cohorts a few years older than them. We find that the EESL revision actually increases the employment rate of men in the affected cohorts in their early 60s, and the effect is larger for employees of the large firms. Also, the increase in elderly workers who stay in the same employer does not replace elderly workers who switch employers, suggesting that the revised EESL does not hinder elderly worker's mobility.

Suggested Citation

  • Ayako Kondo & Hitoshi Shigeoka, 2013. "The Effectiveness of Government Intervention to Promote Elderly Employment: Evidence from Elderly Employment Stabilization Law," Working Papers e061, Tokyo Center for Economic Research.
  • Handle: RePEc:tcr:wpaper:e61
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    References listed on IDEAS

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    1. Behaghel, Luc & Crépon, Bruno & Sédillot, Béatrice, 2008. "The perverse effects of partial employment protection reform: The case of French older workers," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 696-721, April.
    2. Schnalzenberger, Mario & Winter-Ebmer, Rudolf, 2009. "Layoff tax and employment of the elderly," Labour Economics, Elsevier, vol. 16(6), pages 618-624, December.
    3. 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.
    4. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-437, October.
    5. Neumark, David & Song, Joanne, 2013. "Do stronger age discrimination laws make Social Security reforms more effective?," Journal of Public Economics, Elsevier, vol. 108(C), pages 1-16.
    6. 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.
    7. Yukiko Abe, 2001. "Employees' Pension Benefits and the Labor Supply of Older Japanese Workers, 1980s-1990s," NBER Chapters, in: Aging Issues in the United States and Japan, pages 273-306, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Nishimura, Yoshinori, 2016. "Did Government Intervention on Firm’s Employment Policies Have an Effect on the Employment of Elderly Workers?," MPRA Paper 73444, University Library of Munich, Germany.

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