Abstract
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 proles 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 profile 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.
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.
| Original language | English |
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| Place of Publication | Maastricht |
| Publisher | Maastricht University, Graduate School of Business and Economics |
| Number of pages | 30 |
| DOIs | |
| Publication status | Published - 1 Jan 2015 |
Publication series
| Series | GSBE Research Memoranda |
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| Number | 038 |