Old-age unemployment and labour supply: an application to Belgium

Over the last two decades, social security reforms in several European countries have turned early retirement routes for older workers increasingly difficult. The size of the effects of these reforms on labour supply and social security transfers, and how these effects interact with workers’ characteristics have yet to be measured. This article sheds light on this issue by exploring the consequences of postponing access to an old-age unemployment programme—from age 58 to 60—in Belgium. The programme provides laid-off workers with a combination of unemployment benefits and a monthly supplement paid by the employer until the full retirement age. Exploiting register data on the universe of workers and using a difference-in-difference identification strategy, the authors find that UCS eligibility negatively affects employment participation but also mitigates older workers’ participation in other social security programmes.