The labour market for older workers attracts growing attention when trying to solve the problems of demographic change. How can it be achieved that older workers stay in employment for a longer time? How can their reemployment chances be raised? Although integration of the older generation into the labour market has improved in recent years, long term unemployment among this group remains to be high in Germany hinting at ongoing deficits.
In contrast to many other studies the ones presented here analyze both supply and demand side of the labour market. They all rely on combined individual information on employer and employee and use micro-econometric methods. Thus establishment behavior can be taken into account as well as individual employment histories over the life time and their interaction.
Chapter A determines the role establishments play in the retirement process of older workers. A special LIAB data set for the years 1996 to 2004 is used to estimate hazard rate models determining the triggers to end individual employment. It could be shown that institutions like employment protection, the existence of a works council and collective bargaining do not retard the transition out of the employment period. Instead they deteriorate the position of older workers and favour an early exit from working life. It could be confirmed that the employer’s decision to continue the relation to older employees serves as a means to adjust for changes in demand. This could be concluded from the dependency of workers’ exit probability on their establishment’s sales expectations. On the other hand, there have been found circumstances under which older workers have a higher tendency to remain employed. A high share of young employees lowers the propensity to exit from the labour market for their older coworkers. The fear from technical change regarding the labour market participation of older people could not be supported. On the contrary, the results raise the assumption that a modern technical equipment of the establishment has positive repercussions on the employment prospects of the older workers. Apart from that, no negative short term effects of the introduction of new technology could be detected. These results confirm the expectation that the transition to the post-employment phase is heavily influenced by the employing establishment and thus the demand side of the labour market.
Chapter B adds a specific analysis of employment protection and its threshold of application. There are strong theoretical reasons to believe that especially older workers are hindered from reentering employment due to ruling employment protection laws and its threshold. The obligation to take account of social factors – one of which is age - in choosing the persons to be made redundant (“Sozialauswahl”) poses problems to hiring older applicants according to common opinion. This hypothesis could not be confirmed by the RDD analysis of the LIAB data. Using changes in legislation as quasi-natural experiments the method employed is immune to errors in respect to specification of control variables or parametric form.
Neither could be found support for the hypothesis that establishments would hire a larger share of older workers once they had engaged in further training. The effects estimated in Chapter C concerning the effect of company training involvement on the establishments’ age structure in subsequent years were insignificant at best. Once again a combination of data stemming from the IAB establishment panel and employment statistics built the empirical base of the study. The possible endogeneity of the company’s training decision could be controlled by using a matching-algorithm. Comparing twin establishments did not support the assumed casual effect of company training resulting in a higher share of older workers. This can be due to a choice of younger to take part in trainings leading to a crowding out of those not included in their employer’s training decision.