Advertisement

Working time reductions at the end of the career: Do they prolong the time spent in employment?

  • Andrea AlbaneseEmail author
  • Bart Cockx
  • Yannick Thuy
Article
  • 6 Downloads

Abstract

In this paper, we study the effects on the survival rate in the employment of a scheme that facilitates gradual retirement through working time reductions. We use information on the entire labour market career and other observables to control for the selection and take dynamic treatment assignment into account. We also estimate a competing risks model considering different (possibly selective) pathways to early retirement. We find that participation in the scheme prolongs employment during the first 2 (4) years for men (women). However, when individuals become eligible for early retirement, the effect reverses. This suggests that TC initially improves the work–life balance, but that it eventually decreases labour market attachment and signals to employers a preference for early retirement. The institutional environment in which part-time participants are entitled to full-time pensions reinforces the latter process. Participation in TC seems also to generate a slight, statistically insignificant, improvement in health.

Keywords

Part-time work Older workers Inverse probability weighting Dynamic selection into treatment Endogenous sampling 

JEL Classification

J14 C22 J18 J22 

Notes

Acknowledgements

We acknowledge financial support for this research project from the programme Society and Future of the Belgian Science Policy (contract no. TA/00/044) and from the special Research Fund of Ghent University for providing a scholarship to Andrea Albanese (code 01SF3612).

Supplementary material

181_2019_1676_MOESM1_ESM.pdf (616 kb)
Supplementary material 1 (PDF 616 kb)

References

  1. Ahn T (2016) Reduction of working time: does it lead to a healthy lifestyle? Working time and health behaviors. Health Econ 25(8):969–983CrossRefGoogle Scholar
  2. Albanese A, Cockx B (2018) Permanent wage cost subsidies for older workers. An effective tool for employment retention and postponing early retirement? Labour Econ.  https://doi.org/10.1016/j.labeco.2018.01.005 Google Scholar
  3. Aubert P, Crépon B (2003) La productivité des salariés âgés: une tentative d’estimation. Économie et statistique 368(1):95–119CrossRefGoogle Scholar
  4. Aubert P, Crépon B (2006) Are older workers less productive? Firm-level evidence on age-productivity and age-wage profiles. Mimeo, INSEE, ParisGoogle Scholar
  5. Berg PB, Hamman MK, Piszczek M, Ruhm C (2015) Can policy facilitate partial retirement? Evidence from Germany. IZA discussion paper no. 9266, IZA, BonnGoogle Scholar
  6. Busso M, DiNardo J, McCrary J (2014) New evidence on the finite sample properties of propensity score reweighting and matching estimators. Rev Econ Stat 96(5):885–897CrossRefGoogle Scholar
  7. Cameron AC, Trivedi PK (2005) Microeconometrics: methods and applications. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  8. Cardoso AR, Guimarães P, Varejão J (2011) Are older workers worthy of their pay? An empirical investigation of age-productivity and age-wage nexuses. De Econ 159(2):95–111Google Scholar
  9. Cataldi A, Kampelmann S, Rycx F (2012) Does it pay to be productive? The case of age groups. Int J Manpow 33:264–283CrossRefGoogle Scholar
  10. Charles K, Decicca P (2007) Hours flexibility and retirement. Econ Inq 45(2):251–267CrossRefGoogle Scholar
  11. Claes T (2012) La prépension conventionnelle (1974–2012). Courrier hebdomadaire du CRISP 2154(29):5–94CrossRefGoogle Scholar
  12. Crépon B, Ferracci M, Jolivet G, van den Berg G (2009) Active labor market policy effects in a dynamic setting. J Eur Econ Assoc 7(2–3):595–605CrossRefGoogle Scholar
  13. Devisscher S (2004) The career break (time credit) scheme in Belgium and the incentive premiums by the Flemish Government. Discussion paper, IDEA Consult, BrusselsGoogle Scholar
  14. Devisscher S, Sanders D (2008) Ageing and life-course issues: the case of the career break scheme (Belgium) and the life-course regulation (Netherlands). In: OECD, modernising social policy for the new life course. OECD Publishing, Paris.  https://doi.org/10.1787/9789264041271-5-en
  15. Elsayed A, de Grip A, Fouarge D, Montizaan R (2015) Gradual retirement, financial incentives, and labour supply of older workers: evidence from a stated preference analysis. IZA discussion paper no. 9430, IZA, BonnGoogle Scholar
  16. Eurofound (2001) Progressive retirement in Europe. European observatory of working life. Dublin. http://www.eurofound.europa.eu/observatories/eurwork/comparative-information/progressive-retirement-in-europe
  17. Fredriksson P, Johansson P (2008) Dynamic treatment assignment: the consequences for evaluations using observational data. J Bus Econ Stat 26(4):435–445CrossRefGoogle Scholar
  18. Frölich M, Huber M, Wiesenfarth M (2017) The finite sample performance of semi- and nonparametric estimators for treatment effects and policy evaluation. Comput Stat Data Anal 115:91–102CrossRefGoogle Scholar
  19. Gielen A (2009) Working hours flexibility and older workers’ labor supply. Oxf Econ Pap 61(2):240–274CrossRefGoogle Scholar
  20. Graf N, Hofer H, Winter-Ebmer R (2011) Labor supply effects of a subsidized old-age part-time scheme in Austria. J Labour Mark Res 44(3):217–229CrossRefGoogle Scholar
  21. Gustman A, Steinmeier T (1984) Partial retirement and the analysis of retirement behavior. Ind Labor Relat Rev 37(3):403–415CrossRefGoogle Scholar
  22. Hellerstein JK, Neumark D (2007) Production function and wage equation estimation with heterogeneous labor: evidence from a new matched employer–employee data set. In: Hard-to-measure goods and services: essays in Honor of Zvi Griliches. University of Chicago Press, Chicago, Illinois, pp 31–71Google Scholar
  23. Hirano K, Imbens GW, Ridder G (2003) Efficient estimation of average treatment effects using the estimated propensity score. Econometrica 71(4):1161–1189CrossRefGoogle Scholar
  24. Honig M, Hanoch G (1985) Partial retirement as a separate mode of retirement behavior. J Hum Resour 20(1):21–46CrossRefGoogle Scholar
  25. Horvitz DG, Thompson DJ (1952) A generalization of sampling without replacement from a finite universe. J Am Stat Assoc 47(260):663–685CrossRefGoogle Scholar
  26. Huber M, Lechner M, Wunsch C (2013) The performance of estimators based on the propensity score. J Econom 175(1):1–21CrossRefGoogle Scholar
  27. Huber M, Lechner M, Wunsch C (2016) The effect of firms’ phased retirement policies on the labor market outcomes of their employees. ILR Rev 69(5):1216–1248.  https://doi.org/10.1177/0019793916644755 CrossRefGoogle Scholar
  28. Hurd MD (1996) The effect of labor market rigidities on the labor force behavior of older workers. In: Wise D (ed) Advances in the economics of aging. University of Chicago Press, Chicago, pp 11–60Google Scholar
  29. Ilmakunnas P, Maliranta M (2005) Technology, labour characteristics and wage-productivity gaps. Oxf Bull Econ Stat 67(5):623–645CrossRefGoogle Scholar
  30. Imbens G, Wooldridge J (2009) Recent developments in the econometrics of program evaluation. J Econ Lit 47(1):5–86CrossRefGoogle Scholar
  31. Kantarcı T, van Soest A (2008) Gradual retirement: preferences and limitations. De Econ 156(2):113–144Google Scholar
  32. Lechner M, Strittmatter A (2017) Practical procedures to deal with common support problems in matching estimation. Econom Rev.  https://doi.org/10.1080/07474938.2017.1318509 Google Scholar
  33. Lechner M, Wunsch C (2008) What did all the money do? On the general ineffectiveness of recent West German labour market programmes. Kyklos 61(1):134–174CrossRefGoogle Scholar
  34. Lechner M, Miquel R, Wunsch C (2011) Long-run effects of public sector sponsored training in West Germany. J Eur Econ Assoc 9(4):742–784CrossRefGoogle Scholar
  35. Machado CS, Portela M (2012) Hours of work and retirement behavior. IZA discussion paper no. 6270, IZA, BonnGoogle Scholar
  36. Manski C, Lerman SR (1977) The estimation of choice probabilities from choice based samples. Econometrica 45(8):1977–1988CrossRefGoogle Scholar
  37. OECD (2017) OECD.StatExtracts. www.stats.oecd.org. Retrieved 1 June 2017
  38. Picchio M (2015) Is training effective for older workers? IZA World of Labor 2015, p 121Google Scholar
  39. Rudolf R (2014) Work shorter, be happier? Longitudinal evidence from the korean five-day working policy. J Happiness Stud 15(5):1139–1163CrossRefGoogle Scholar
  40. Schmid G (1998) Transitional labour markets: a new European employment strategy. WZB discussion paper, no. FS I, pp 98–206Google Scholar
  41. Shao J (2003) Impact of the bootstrap on sample surveys. Stat Sci 18(2):191–198CrossRefGoogle Scholar
  42. Van Looy P, Kovalenko M, Mortelmans D, De Preter H (2014) Working hours-reduction in the move to full retirement: how does this affect retirement preferences of 50 + individuals in Flanders? : Steunpunt WSE/Antwerpen. Steunpunt WSE/Antwerpen: CELLO, Universiteit Antwerpen, LeuvenGoogle Scholar
  43. van Ours J, Stoeldraijer L (2011) Age, wage and productivity in Dutch manufacturing. De Econ 159(2):113–137Google Scholar
  44. Vandenberghe V, Waltenberg F, Rigo M (2013) Ageing and employability. evidence from Belgian firm level data. J Prod Anal 40:111–136CrossRefGoogle Scholar
  45. Vikström J (2017) Dynamic treatment assignment and evaluation of active labor market policies. Labour Econ 49(C):42–54CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Labour Market DepartmentLuxembourg Institute of Socio-Economic Research (LISER)Esch-sur-AlzetteLuxembourg
  2. 2.Federal Planning BureauBrusselsBelgium
  3. 3.Department of Economics, Faculty of Economics and Business AdministrationGhent UniversityGhentBelgium
  4. 4.IZABonnGermany
  5. 5.GLOMaastrichtThe Netherlands
  6. 6.IRESUniversité Catholique de LouvainLouvain-la-NeuveBelgium
  7. 7.CESIfoMunichGermany

Personalised recommendations