The Effects of Employers' Disability and Unemployment Insurance Costs on Benefit Inflows
In: VATT Institute for Economic Research Working Papers 152
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In: VATT Institute for Economic Research Working Papers 152
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In: VATT Working Papers 46
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Working paper
In: IZA Discussion Paper No. 15797
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In: IZA Discussion Paper No. 7344
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In: Government Institute for Economic Research Working Papers No. 60
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Working paper
In: Economics of education review, Band 28, Heft 5, S. 648
ISSN: 0272-7757
In: Economic policy, Band 37, Heft 112, S. 811-849
ISSN: 1468-0327
Abstract
There are two important barriers to increasing the employment of older workers under rapid technological change. First, older workers engaged in codifiable, routine tasks are particularly prone to the risk of being displaced by computers and robots. Second, several countries have in place various labour market institutions that encourage early retirement, such as exceptional entitlements or looser criteria for unemployment and disability benefits applied to older individuals. We present evidence that these two factors reinforce each other to push older workers out of employment. We find that older workers who are more exposed to digital technologies face a higher risk of exiting employment and that this effect is significantly magnified when they are eligible for an extension of unemployment benefits until the earliest age for drawing old age pension. Furthermore, we present a simple simulation to illustrate that a policy reform that tightens the eligibility for the benefits extension increases mostly the employment of older workers that are more exposed to digital technologies. Our findings provide an important implication on policies to promote longer working lives under rapid technological change. They highlight the importance of closing institutional pathways to early retirement to encourage employers and older workers to make the necessary investment that would allow older workers to keep up with technological change and work longer.
In: VATT Institute for Economic Research Working Papers 136, 2020
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In: IZA Discussion Paper No. 13990
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Working paper