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Wages and Ageing: Is There Evidence for the ‘Inverse‐U’ Profile?

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  • Michał Myck

Abstract

How individual wages change with time is one of the crucial determinants of labour market decisions including the timing of retirement. The focus of this paper is the relationship between age and wages with special attention given to individuals nearing retirement. The analysis is presented in a comparative context for Britain and Germany looking at two longitudinal data sets (BHPS and SOEP, respectively) for the years 1995–2004. We show the importance of cohort effects and selection out of employment which determine the downward‐sloping part of the ‘inverse‐U’ profile observed in cross‐sections. There is little evidence that wages fall with age.

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  • Michał Myck, 2010. "Wages and Ageing: Is There Evidence for the ‘Inverse‐U’ Profile?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(3), pages 282-306, June.
    • Handle: RePEc:bla:obuest:v:72:y:2010:i:3:p:282-306
    DOI: 10.1111/j.1468-0084.2009.00582.x
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    2. Kadija Charni & Stephen Bazen, 2017. "Do earnings really decline for older workers?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 38(1), pages 4-24, April.
    3. Michał Myck, 2010. "Wages and Ageing: Is There Evidence for the ‘Inverse‐U’ Profile?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(3), pages 282-306, June.
    4. Christian Dudel, 2009. "The Demographic Dilemma: Fertility, Female Labor Force Participation and Future Growth in Germany 2007-2060," SOEPpapers on Multidisciplinary Panel Data Research 158, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Justyna Stypińska & Laura Romeu Gordo, 2018. "Gender, age and migration: an intersectional approach to inequalities in the labour market," European Journal of Ageing, Springer, vol. 15(1), pages 23-33, March.
    6. V. Vandenberghe, 2011. "Boosting the Employment Rate of Older Men and Women," De Economist, Springer, vol. 159(2), pages 159-191, June.
    7. Vladimir Gimpelson, 2019. "Age and Wage: Stylized Facts and Russian Evidence," HSE Economic Journal, National Research University Higher School of Economics, vol. 23(2), pages 185-237.
    8. Aistov, Andrey, 2018. "Age-earnings profiles of different generations," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 50, pages 23-42.
    9. Kadija Charni, 2016. "Is it Better to Work When We Are Older? An Empirical Comparison Between France and Great Britain," Working Papers halshs-01393268, HAL.
    10. Paulina Broniatowska & Aleksandra Majchrowska & Maciej Nasiński, 2020. "Age Structure of Employment and Wages. An Analysis Across Occupational Groups," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 12(3), pages 227-250, September.
    11. Mikk Medijainen, 2010. "Generational Accounting As A Tool To Evaluate The Fiscal Sustainability Of Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 74, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    12. Maciej Lis, 2017. "Productivity based selection to retirement: Evidence from EU-SILC," IBS Working Papers 02/2017, Instytut Badan Strukturalnych.
    13. Bertoni, Marco & Brunello, Giorgio & Rocco, Lorenzo, 2015. "Selection and the age – productivity profile. Evidence from chess players," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 45-58.
    14. Majchrowska Aleksandra & Broniatowska Paulina, 2018. "The workforce’s age structure and wages—Do age and the type of occupation matter?," Lodz Economics Working Papers 8/2018, University of Lodz, Faculty of Economics and Sociology.
    15. Joanna Tyrowicz & Krzysztof Makarski & Marcin Bielecki, 2016. "Reforming retirement age in DB and DC pension systems in an aging OLG economy with heterogenous agents," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-36, December.
    16. Axel Börsch-Supan & Irene Ferrari & Nicolas Goll & Johannes Rausch, 2023. "Retirement Decisions in Germany: Micro-Modelling," NBER Chapters, in: Social Security Programs and Retirement around the World: The Effects of Reforms on Retirement Behavior, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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