Hiring Older Employees: Do the Age Limits of Early Retirement and the Contribution Rates of Firms Matter?

Pekka Ilmakunnas and Seija Ilmakunnas

Scandinavian Journal of Economics, 2015, vol. 117, issue 1, 164-194

Abstract: We examine the effects of a Finnish pension reform on firms' incentives to hire older employees. The reform restricted the eligibility ages for early retirement and changed the size-related contribution rates of firms. According to our theoretical model, the positive effect on the values of new hires extends to age groups younger than those directly affected by the reform, and the effects are strongest in the largest firms. These model predictions were confirmed in a difference-in-difference-in-differences analysis on the probability of the hiring of workers of different ages in firms of different sizes.

Date: 2015
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