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Population Aging and the Labor Market

AutorMachado, Candida
DirectorCardoso, Ana Rute ; Portela, Miguel
Fecha de publicación15-jul-2010
EditorUniversidade do Minho
ResumenUnder the demographic context of population aging and considering its implications on the age composition of the labor force, this thesis investigates the labor market opportunities experienced by older individuals and additionally questions whether a specific form of flexible work arrangement would help to expand older employees’ working career, contributing this way to an active aging. Due to the fear of prospective labor supply shortages, as well as to issues related to the sustainability of Social Security systems, there exists a growing concern towards increasing the labor force participation of older workers. Therefore, opportunities must be created and/or made accessible to these individuals in order for them to find attractiveness in postponing the passage to inactivity. For the study of labor market opportunities, using a longitudinal employer-employee data set, I concentrate on hiring and promotion prospects faced by the elderly. First, I make use of a fractional logit model to evaluate the hiring opportunities at the reach of older individuals. I find that although Portuguese firms employ older workers they have a preference for hiring younger individuals and this preference results from the fact that employers seem to favor long-term employment relationships with their employees. In effect, empirical results show a statistically significant negative association between the share of the workforce with more than 5 years of tenure and the share of older workers’ hired. Second, the research on older workers’ opportunities for promotion departs from a sample of new firms and their employees. Survival analysis suggests that younger employees experience shorter times to promotion than older workers and, therefore, the latter face a smaller likelihood of promotion. Both the above researches highlight the lack of opportunities for older individuals. They are passed over for hiring and promotion because of age. This calls for the need of policy intervention to incentive firms to hire and provide career development chances for those that are older. As a means to extend older individuals’ participation in the labor force, another dimension of active aging policies focus on the adoption of flexibility in working arrangements. Thus, in a third and final research, the underlying question is whether working hours’ flexibility is associated with delayed exit from the labor market. Using a novel dataset from the 2006 Portuguese Labor Force Survey and employing duration models I find that reducing hours of work before retirement is associated with early exits from the labor force. A reduction of hours of work seems to signal the wish to retire sooner rather than to announce the desire of retirement postponement. Hence, flexibility in hours of work appears not to be an effective instrument to promote active aging.
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