Specific Measures for Older Employees and Late Career Employment

In times of demographic ageing and potential skills shortages, employment of older workers becomes an increasingly important topic. During the last centuries, firms in developed countries have actively promoted early retirement. Now that birth cohorts decrease in size and the inflow of young workers into employment dwindles, firms start to focus on their existing workforces. Many firms develop strategies to preserve the potential of older workers by inducing them to stay longer and transit to retirement later.

Knowing the advantages and potential risks of employing older workers, firms apply a variety of human resources measures specifically targeted at this group. Older workers more often than their younger colleagues exhibit declining physical and cognitive skills, relatively low flexibility and mobility. Typical measures consist in the age-specific equipment of the workspace, reduced working time, reduced work intensity, part-time schemes, and training. We refer to these human resources measures as specific measures for older employees (SMOE). This is the first study about the effects of SMOE on job exit or the retirement decision.

In this study, we are interested in the question whether SMOE are associated with longer employment duration of older workers in the respective company. For our analysis, we estimate age-specific job exit rates for employees between 40 and 65 years. We use longitudinal employer-employee data for Germany. The data contain information on the existence of SMOE on the establishment level, which are extended by worker-specific information on job duration. 50 percent of establishments that employ older workers apply at least one SMOE.

Our estimation results show that employment spells of older workers last longer in firms that apply mixed-age work teams. Job exits by workers in these firms are reduced throughout from age 52 to 64. By contrast, employment durations in firms that participate in an old-age part-time scheme are shorter as compared to other firms. All other SMOE, like specific equipment of workspaces and training, are not related to a change of employment duration for older workers.

Boockmann, Bernhard, Jan Fries and Christian Göbel (2012), Specific Measures for Older Employees and Late Career Employment, ZEW Discussion Paper No. 12-059, Mannheim.