Skip to main content

Labor market rigidities and the employment behavior of older workers (Blau & Shvydko 2011)

Absence of conflict of interest.

Citation

Blau, D., & Shvydko, T. (2011). Labor market rigidities and the employment behavior of older workers. Industrial and Labor Relations Review, 64(3), 464-484.

Highlights

  • The study’s objective was to examine the impact of flexibility in hours of work on the likelihood that older workers separate from an employer.
  • The study used a statistical model to compare the job exit behavior of older and younger workers in firms with different shares of women younger than age 30. The analysis used monthly data on workers ages 45 to 69 in the Survey of Income and Program Participation from 1990 to 2001 matched to employers in the Longitudinal Employment and Household Dynamics data.
  • The study found that workers in their sixties who work for employers with a higher share of women younger than age 30 are less likely to experience job separations compared with workers in their late 40s to mid-50s.
  • The quality of causal evidence presented in this report is low because the groups being compared might not be similar before leaving their employer. This means we are not confident that the estimated effects are attributable to employment flexibility, other factors are likely to have contributed.

Intervention Examined

Employment flexibility

Features of the Study

The authors used a statistical model (difference-in-differences approach) to examine the effect of flexibility in hours of work on the likelihood of monthly job separations for older workers in several age ranges, accounting for other individual, industry, and firm characteristics. The authors used the share of women younger than age 30 in the employer’s workforce to represent flexibility in hours of work, because working women of childbearing age could have a strong preference for flexible work schedules. The authors also used the share of older workers to represent flexibility in hours of work, but this variable could be problematic because employers with a higher separation rate of older workers might have a low share of older workers in the firm as a result.

Findings

Employment

  • The study found greater flexibility in hours of work (as measured by a higher share of women younger than age 30 in an employer’s labor force) was associated with lower likelihood of job separations for workers in their 60s compared with workers in their early- to mid-40s.
  • The study also found greater flexibility in hours of work was associated with a lower likelihood of separations into non-employment (including unemployment, retirement, and undetermined destination) for workers in their 60s compared with younger workers.

Considerations for Interpreting the Findings

Although the authors account for several observable differences (specifically, measurable demographics and social economic characteristics) between groups of older workers in their analysis, the results could still be impacted by the unmeasured preferences and older workers’ self-selection into different firms in the study. For example, older workers and young women who have a strong preference for work might choose to work for employers who have flexibility in hours of work to accommodate their needs. Therefore, the representation variable approach might overestimate the effect of the employment flexibility on job separation for older workers. Furthermore, employers’ policies could actually reflect the preferences of their employees rather than vice versa. The firms with higher shares of older workers or young women who have strong preference for work might adopt flexible employment policies to accommodate the needs of these employees, and as a result, older workers and young women are less likely to leave the employer. The study does not adequately account for this scenario. The authors also explored several instrumental variable strategies but none were successful. As such, these unobserved differences between groups could explain the differences in outcomes.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the groups being compared might not be similar before leaving their employer. This means we are not confident that the estimated effects are attributable to employment flexibility, as represented by the share of women younger than age 30 in the employer’s workforce; other factors are likely to have contributed.

Reviewed by CLEAR

August 2019

Topic Area