Seniority Wages and the Role of Firms in Retirement

Arbeitspapier

In general, retirement is seen as a pure labor supply phenomenon, but firms can have strong incentives to send expensive older workers into retirement. Based on the seniority wage model developed by Lazear (1979), we discuss steep seniority wage profiles as incentives for firms to dismiss older workers before retirement. Conditional on individual retirement incentives, e.g., social security wealth or health status, the steepness of the wage pro le will have different incentives for workers as compared to firms when it comes to the retirement date. Using an instrumental variable approach to account for selection of workers in our firms and for reverse causality, we find that firms with higher labor costs for older workers are associated with lower job exit age.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper, CD-Lab Aging, Health and the Labor Market, Johannes Kepler University ; No. 1506

Classification and Topics

• Classification: Wirtschaft ; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination ; Retirement; Retirement Policies ; Wage Level and Structure; Wage Differentials ; Social Security and Public Pensions
• Subject: retirement ; seniority wages ; firm incentives

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Frimmel, Wolfgang ; Horvath, Thomas ; Schnalzenberger, Mario ; Winter-Ebmer, Rudolf
• Event: Veröffentlichung
• (who): Johannes Kepler University Linz, Christian Doppler Laboratory Aging, Health and the Labor Market
• (where): Linz
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/115121
• Last update: 10.03.2025, 11:45 AM CET