Age-specific production systems and employment duration

Bernhard Boockmann, Fries Jan, Göbel Christian
ZEW, Germany

We study the relation of age-specific personnel policy programmes at the firm-level on transitions out of employment for older workers. Our interest is to analyse the effects on individual employment exit behaviour when the firm provides age-specific production systems for its employees. These programmes comprise of many different ideas: some firms offer partial retirement plans or part-time work, whereas other firms encourage workers to stay longer by providing special training, specific workplaces or mixed-age teams. For a long time, the prevailing view was that investment in training does not pay off for older workers, since the expected time until employment exit or retirement is short. This may change when firms have to rely more on older workers. Estimation results show that there is in fact a strong age effect when controlling for duration dependence. Our interest lies in the effects caused by age-specific production systems offered by the employer, such as specific workplaces and reduced working requirements, further training for the elderly, mixed-age teams, and part-time work. About 70 percent of firms in the data apply age-specific personnel policies for older workers. We group firms that apply similar personnel policies and calculate individual employment hazards for each of these groups. Do these programmes work in a way to reduce employment exits for older workers? Our first results suggest positive effectiveness of these measures, as they reduce overall employment hazards for older employees and in particular smooth hazard profiles at certain age thresholds.

View full paper