The effects of an ageing workforce on labour demand and workers’ careers: Evidence from linked employer-employee data and pension reforms in the Netherlands and other countries

In response to population ageing and steady increases in life expectancy, governments in many developed countries are raising eligibility ages for retirement pensions. By doing so, they aim to reduce national pension expenditures and encourage older workers to delay retirement. While the literature shows that these policies generally have the desired effects (OECD 2012, Atav et al. 2019, Lindeboom and Montizaan forth.), there are concerns about their broader economic effects. For example, since older workers are, on average, less productive, less innovative and less willing to take risks than younger workers (Jones, 2010, Liang et al., 2014), policies that dissuade older workers from retiring may have adverse effects on firm productivity and economic growth. Furthermore, many younger workers feel that their careers are held back by their older co-workers (Bianchi et al. 2020) which may lower their effort levels and allegiance to the firm. These pressures, which are already mounting due to the significant presence of Baby Boomers in the workforce, are likely to intensify further as statutory retirement ages continue to increase.

In our study, we will use high-quality administrative data from three OECD countries (the Netherlands, Denmark and  Australia) to estimate the effects of more representative statutory retirement age reforms on the economic outcomes of firms (such as the size and age composition of their workforce, the number of hires and layoffs, total labor costs and profits) and workers (such as their wages, hours worked, promotions and departures from the firm).

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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