The Pre-Retirement Job Search: A Basic Explanation of the Older Worker Employment

Jean-Olivier Hairault, Francois Langot and Thepthida Sopraseuth

No 07-01, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: This paper presents a theoretical foundation and empirical evidence in favor of the view that the retirement age decision impacts on the search intensity of older workers before this age. Countries with a retirement age at 60 are indeed characterized by lower employment rates for workers aged 55-59. Based on the French Labor Force Survey, we show that the likelihood of employment is significantly affected by the distance from retirement, in addition to age and other relevant variables. We then extend McCall’s (1970) job search model by explicitly integrating life-cycle features and the retirement decision. Using simulations. we show that the distance effect in conjunction with the generosity of unemployment benefits for older workers explains the low rate of employment just before the eligibility retirement age. Finally, we show that implementing actuarially-fair schemes, not only extends the retirement age, but also encourages a more intensive job-search by older unemployed workers.

Keywords: Job search; Older workers; Retirement (search for similar items in EconPapers)
JEL-codes: H55 J22 J26 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2007
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Citations: View citations in EconPapers (1)

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