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Permanent wage cost subsidies for older workers. An effective tool for employment retention and postponing early retirement?

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  • Albanese, Andrea
  • Cockx, Bart

Abstract

This paper examines the effects of a permanent wage cost subsidy in Belgium on employment retention, working time and hourly wage of older men. To estimate these effects we propose a semi-parametric weighted difference-in-differences estimator that accounts for endogenous stratification in the sampling from a population of men born between 1941 and 1950. We find small positive short-run impacts on working time and larger ones on the retention rate in employment, but only for employees at high risk of early retirement. The wage is not affected.

Suggested Citation

  • Albanese, Andrea & Cockx, Bart, 2019. "Permanent wage cost subsidies for older workers. An effective tool for employment retention and postponing early retirement?," Labour Economics, Elsevier, vol. 58(C), pages 145-166.
    • Handle: RePEc:eee:labeco:v:58:y:2019:i:c:p:145-166
    DOI: 10.1016/j.labeco.2018.01.005
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    Citations

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    Cited by:

    1. Andrea Albanese & Bart Cockx & Muriel Dejemeppe, 2022. "Long-Term Effects of Hiring Subsidies for Unemployed Youths—Beware of Spillovers," CESifo Working Paper Series 9972, CESifo.
    2. Irene Ferrari & Jan Kabátek & Todd Morris, 2023. "Longer careers: A barrier to hiring and coworker advancement?," Working Papers 2023:06, Department of Economics, University of Venice "Ca' Foscari".
    3. repec:wbk:wbrwps:10265 is not listed on IDEAS
    4. Leduc, Elisabeth & Tojerow, Ilan, 2020. "Subsidizing Domestic Services as a Tool to Fight Unemployment: Effectiveness and Hidden Costs," IZA Discussion Papers 13544, Institute of Labor Economics (IZA).
    5. Guy Lacroix & Pierre-Carl Michaud, 2024. "Tax Incentives and Older Workers: Evidence from Canada," Cahiers de recherche / Working Papers 02, Chaire de recherche Jacques-Parizeau en politiques économiques / Jacques-Parizeau Research Chair in Economic Policy.
    6. Cockx, B. & Declercq, Koen & Dejemeppe, Muriel, 2022. "Losing prospective entitlement to unemployment benefits. Impact on educational attainment," ROA Research Memorandum 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    7. Cockx, Bart & Desiere, Sam, 2024. "Labour costs and the decision to hire the first employee," European Economic Review, Elsevier, vol. 170(C).
    8. Lorenz, Svenja & Zwick, Thomas & Bruns, Mona, 2022. "Beware of the employer: Financial incentives for employees may fail to prolong old-age employment," The Journal of the Economics of Ageing, Elsevier, vol. 21(C).
    9. Pawel Chrostek & Krzysztof Karbownik & Michal Myck, 2024. "Labor Market Externalities of Pre-Retirement Employment Protection," CESifo Working Paper Series 11078, CESifo.
    10. De Brouwer, Octave & Tojerow, Ilan, 2023. "The Growth of Disability Insurance in Belgium: Determinants and Policy Implications," IZA Discussion Papers 16376, Institute of Labor Economics (IZA).
    11. Albanese, Andrea & Cockx, Bart & Dejemeppe, Muriel, 2024. "Long-term effects of hiring subsidies for low-educated unemployed youths," Journal of Public Economics, Elsevier, vol. 235(C).
    12. Gustafsson, Johan, 2024. "Favorable tax treatment of older workers in general equilibrium," Umeå Economic Studies 1023, Umeå University, Department of Economics.
    13. Miguel Lorca, 2021. "Effects of COVID‐19 early release of pension funds: The case of Chile," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(4), pages 903-936, December.
    14. Ulrike Huemer & Rainer Eppel & Marion Kogler & Helmut Mahringer & Lukas Schmoigl & David Pichler, 2021. "Effektivität von Instrumenten der aktiven Arbeitsmarktpolitik in unterschiedlichen Konjunkturphasen," WIFO Studies, WIFO, number 67250.

    More about this item

    Keywords

    Wage cost subsidies; Older workers; Weighted difference-in-differences; Endogenous sampling;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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