The employment of people over age of 55 has increased substantially over the past two decades because of the aging of society and because of the increasing participation rate of elderly. Labour market results however deteriorate as people get older. The probability of finding a job and investments in new skills and knowledge diminish with age. Rob Euwals, Stefan Boeters, Nicole Bosch, Anja Deelen and Bas ter Weel (all CPB) identify in this paper three possible reasons for government intervention: fiscal externalities of the unemployment insurance, distorted human capital investment decisions and wage rigidities in the course of the working life.

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