Gradual retirement and lengthening of working life

In order for the part-time pension to make sense economically, it should extend the length of the working career. An interesting question is also whether the timing of retirement and willingness to work after retirement are related. We use data on the aspirations of individuals regarding their old-age retirement behaviour to estimate a multivariate probit model with three binary dependent variables: partial retirement, planning to continue working beyond age 63, and planning to continue working while on retirement. The model is estimated using simulated maximum likelihood. The probability of being on part-time pension increases with the length of working career, but decreases with wage. It is positively related to an indicator of chronic illness. Age has a positive effect on the probability of thinking about continuing working after age 63, which is natural since in the older age cohorts those preferring to retire early have already done that. Higher wage and private pension insurance have a negative effect on the probability of continuing to work, while the level of education increases it. Women and those having mental strain in their job are less likely to postpone retirement. The probability of continuing work while retired is difficult to predict. Only good self-assessed health seems to play an important role in this decision-making. Being on partial retirement has no positive impact on the probability of preferring to stay longer at work. This gives support to the worries that partial retirement is a tool that helps in increasing the labour force participation of the aging labour force, but at a relatively high cost.part-time retirement; retirement age; retirement expectations

Hiring older employees: Do incentives of early retirement channels matter?

We examine the impact of a Finnish reform in the 1990s that restricted the use of particular early retirement channels, unemployment pension and individual early retirement, and simultaneously changed the rules of firm size related experience rating in disability pensions. Our emphasis is on how the reforms affected the incentives of the firms to hire older employees. In a simple model we illustrate how forward-looking behaviour of firms affects the value of a new hire. Simulations with the model illustrate that although the reform in the unemployment pension in principle affected particular age groups, 53-54 year olds in the case of unemployment pension and 55-57 year olds in the case of individual early retirement, the impacts on hiring may have been felt also in other, younger, age groups. On the other hand, the effects of both reforms are likely to have varied by firm size. In a differences-indifferences-in-differences analysis with firm-level data we show that the impact of the reforms has been to increase the probability of hiring especially in the age group 51-52 and especially in the largest firms.early retirement; hiring; pension reform

Lower bounds of concentration in a small open economy

We examine how Sutton’s “bounds” approach works in a small country where industries have relatively high export and import intensities. Import competition is used as an indicator for the degree of competition in the low sunk cost industries. The bounds are estimated as stochastic frontiers, where observable industry characteristics, export intensity and entry barriers, are allowed to affect the mean and variance of the deviations from the frontier. In accordance with the theory, high R&D intensity industries have a lower bound for concentration, which is higher than that for low sunk cost intensity industries. For high advertising industries the theory does not hold as well. High import competition leads to a higher bound in the low sunk cost industries.concentration; sunk costs; R&D; stochastic frontiers

Working Inflow, Outflow, and Churning

Linked employer-employee data from the Finnish business sector is used in an analysis of worker turnover. The data is an unbalanced panel with over 219 000 observations in the years 1991-97. The churning (excess worker turnover), worker inflow (hiring), and worker outflow (separation) rates are explained by various plant and employee characteristics in type 2 Tobit models where the explanatory variables can have a different effect on the probability of the flow rates to be non-zero and on the magnitude of the flow rate when it is positive. Most of the characteristics are defined as 5-group categorical variables defined for each industry separately in each year. We compare the Tobit results to OLS estimates, and also use weighting by plant employment. It turns out that weighted OLS results are fairly close to Tobit results. The probabilities of observing non-zero churning, inflow, and outflow rates increase with plant size. The magnitudes of the non-zero churning and inflow rates depend positively on size, but the magnitude of outflow rate negatively. High-wage plants have low turnover, whereas plants with large within-plant variation in wages have high turnover. Average tenure of employees has a negative impact on turnover. High plant employment growth increases churning and separation but reduces hiring in the next year. We also control various other plant and average employee characteristics like average age and education, shares of women and homeowners, foreign ownership, ownership changes, and regional unemployment.http://deepblue.lib.umich.edu/bitstream/2027.42/39997/3/wp611.pd

Job disamenities, job satisfaction, quit intentions, and actual separations: putting the pieces together

We analyze the potential role of adverse working conditions at the workplace in the determination of employees’ quit behavior. Our data contain both detailed information on perceived job disamenities, job satisfaction, and quit intentions from a cross-section survey and information on employees’ actual job switches from longitudinal register data that can be linked to the survey. Reduced-form models show that employees facing adverse working conditions tend to have greater intentions to switch jobs and search for new matches more frequently. Multivariate probit models point out that job dissatisfaction that arises in adverse working conditions is related to job search and this in turn is related to actual job switches

Gradual Retirement and Lengthening of Working Life

In order for the part-time pension to make sense economically, it should extend the length of the working career. An interesting question is also whether the timing of retirement and willingness to work after retirement are related. We use data on the aspirations of individuals regarding their old-age retirement behaviour to estimate a multivariate probit model with three binary dependent variables: partial retirement, planning to continue working beyond age 63, and planning to continue working while on retirement. The model is estimated using simulated maximum likelihood. The probability of being on part-time pension increases with the length of working career, but decreases with wage. It is positively related to an indicator of chronic illness. Age has a positive effect on the probability of thinking about continuing working after age 63, which is natural since in the older age cohorts those preferring to retire early have already done that. Higher wage and private pension insurance have a negative effect on the probability of continuing to work, while the level of education increases it. Women and those having mental strain in their job are less likely to postpone retirement. The probability of continuing work while retired is difficult to predict. Only good self-assessed health seems to play an important role in this decision-making. Being on partial retirement has no positive impact on the probability of preferring to stay longer at work. This gives support to the worries that partial retirement is a tool that helps in increasing the labour force participation of the aging labour force, but at a relatively high cost

Job disamenities, job satisfaction, and on-the-job search: is there a nexus?

This study explores the potential role of adverse working conditions at the workplace in the determination of on-the-job search in the Finnish labour market. The results reveal that workers currently facing adverse working conditions have greater intentions to switch jobs and they are also more willing to stop working completely. In addition, those workers search new matches more frequently. There is evidence that adverse working conditions consistently increase the level of job dissatisfaction and, in turn, it is job dissatisfaction that drives workers’ intentions to quit and intensifies actual job search.working conditions, job satisfaction, on-the-job search, quit intentions

Do Job Disamenities Raise Wages or Ruin Job Satisfaction?

This study investigates the role of adverse working conditions in the determination of individual wages and overall job satisfaction in the Finnish labour market. The potential influence of adverse working conditions on self-reported fairness of pay at the workplace is considered as an alternative, indirect measure of job satisfaction. The results show that working conditions have a very minor role in the determination of individual wages in the Finnish labour market. In contrast, adverse working conditions substantially increase the level of job dissatisfaction and the perception of unfairness of pay at the workplace.compensating wage differentials, job satisfaction, working conditions

Entrepreneurship, Economic Risks, and Risk Insurance in the Welfare State: Results with OECD Data 1978-93

We find evidence in the OECD cross-country data to support the Knightian view that non-diversifiable economic risks shape equilibrium entrepreneurship in an occupational choice model. Differential social insurance of entrepreneurial and labor risk is found to be statistically significant and detrimental to entrepreneurship. The crowding-out effect of public production of private goods on entrepreneurship dominates the crowding-in effect of public production of public goods in the OECD data. Weak evidence is found for the proposition that the rate of entrepreneurship is related to the degree of income inequality and to the union power in the economy. The results also suggest that a high living standard has a detrimental effect on self-employment.Entrepreneurship, risks, the welfare state, social risk insurance, crowding-out