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The Ageing Workforce and Labour Market Mobility - Do Mobility Patterns Differ between Age Groups and Welfare Regimes?
The ageing of the population will substantially affect the labour markets of most European countries. The traditional view derived from human capital theory is that the ageing work force will lead to reduced productivity, increased wage costs and rising unemployment. Moreover, the shortage of juvenile labour due to reduced fertility rates will change the intergenerational wage distribution in favour of the younger workers. Following this, it is argued that due to the low investment in their human capital senior workers will be less mobile and labour market mobility will hence fall because of ageing. However, these predictions derived from theory are hardly tested. The aim of this paper is to test whether these predictions make sense when examining the real evidence for a number of countries over a number of years. For the analysis, the five-wave dataset of the European Community Household Panel Survey (ECHP) covering the period 1994-1998 has been used. First we have investigated to what extent investments in training for senior workers are lower than for younger age groups. In general, senior workers in all employment regimes have lower education levels than young workers. Viewing the outcomes by employment regime, it appeared that workers across all age groups in Southern regimes had the lowest education levels. Our conjecture that the ‘investment in human capital is lower for senior workers’ has shown to be largely true: apart from the lower education levels of senior workers, in all regimes the percentage of people receiving training on the job falls with age. In addition, the type of training obtained also differs across age groups: senior workers are more likely to receive vocational training whereas younger workers are more likely to receive general training. Second, we looked at the impact this reduced investment in older worker’s training efforts might have on the labour mobility of senior workers. The main question to be answered is to what extent investments in the human capital of senior workers affect their labour mobility compared with younger workers. The evidence suggests that in all employment regimes, both the young and the old have the highest job to non-job mobility. Although senior workers do have lower probabilities to become unemployed compared to the young, once they become unemployed they stay longer unemployed. Our conjecture that the job to non-job mobility in Social-democratic and Corporatist regimes is highest because of the use of social security arrangements as early retirement pathways is supported by the data. In the final part of the paper, the hypotheses about movements to self-employment are analysed. The highest percentages of workers in all age groups working as self-employed are found in Southern regimes. People with longer tenure in their current job are not likely to move into selfemployment probably because of build-up pension rights and rights to early retirement which are not available anymore when they move to self-employment. There seems to be an institutional barrier to move to self-employment for which reason it is more likely for them to use alternative exit pathways. The highest mobility into self-employment was expected in Liberal and Southern regimes. This seems only partially to be true: the probability of becoming self-employed is higher in Southern regimes whereas it is less likely to become self-employed in Corporatist regimes compared with the Liberal regime.
Schils, Trudie & Muffels, Ruud (2003) 'The Ageing Workforce and Labour Market Mobility - Do Mobility Patterns Differ between Age groups and Welfare Regimes?', EPAG Working Paper - 44. Colchester: University of Essex.
Ruud J. A. Muffels, Trudie Schils
Countries included
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, United Kingdom
ECHP Waves
1994, 1995, 1996, 1997, 1998, 1999, 2000
Institutions Involved
Tilburg Institute for Social and Socio-Economic Research, Tilburg University, the Netherlands
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