Older workers' employment participation: New evidence from Luxembourg

Industrialized countries are witnessing higher life expectancies, while fertility is declining and is likely to stay below reproduction rate in the future (OECD, 2005). There is a compositional shift from younger to older age groups. In order to sustain the pension insurance system and to moderate the potentially adverse effects of demographic change on economic growth, there is an increasing need to extend the work time through reforms of the pension system or early retirement or/and to improve the employment participation of higher working age people. We will focus on employment participation of older workers (OWs) as an important part of the solution to this challenge. Our research question is how to raise OWs' labor force participation. The main objective of WorkAgeing is to investigate two dimensions explaining OWs' employment participation. The first analysis is at the employer-level, focusing on employer' labor demand behavior (retention and hiring), ? and related aspects linked to age-specific measures for older employees or take-up of hiring subsidies. The second analysis is at the employee-level, focusing on employees' perceived employability ? and related aspects linked to individual characteristics and perceived working conditions (e.g., cognitive abilities, wages, past professional trajectories, participation in human resource management (HRM) practices). Specifically, using several databases for Luxembourg, WorkAgeing extends the literature on OWs' employment participation by analysing: (1) the effects of SMOEs on dynamics of labor demand; (2) the incentive effects of OWs' hiring subsidies on dynamics of labor demand among different age groups; (3) the HRM practices' complementarity and their impact on OWs' performance and voluntary quit and (4) the OWs' cognitive abilities in the link between past professional trajectories and OWs' productivity.