Wages and Ageing: Is There Evidence for the "Inverse-U" Profile?

Michal Myck

No 2983, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: How individual wages change with time, and how they are expected to change as individuals grow older, is one of crucial determinants of their behaviour on the labour market including their decision to retire. The profile of individual hourly wages has for a long time been assumed to follow an “inverse-U” path, although there has been little work specifically concerning the age-wage profile and documenting it convincingly. The focus of this paper is the relationship between age and wages with special attention given to individuals close to retirement. The analysis is presented in a comparative context for Britain and Germany looking at two longitudinal datasets (BHPS and GSOEP respectively) for years 1995-2004. It stresses the importance of cohort effects and selection out of employment which seem crucial in determining the downward-sloping part of the “inverse-U” profile observed in most cross-sections. There seems to be little evidence that wages fall with age.

Keywords: wage dynamics; selection; ageing (search for similar items in EconPapers)
JEL-codes: C14 J14 J21 J31 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-08
New Economics Papers: this item is included in nep-age, nep-hea and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - revised version published in: Oxford Bulletin of Economics and Statistics , 2010, 72 (3), 282-306

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Related works:
Journal Article: Wages and Ageing: Is There Evidence for the ‘Inverse‐U’ Profile?* (2010)
Working Paper: Wages and Ageing: Is There Evidence for the "Inverse-U Profile"? (2007)
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