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Age segregation and hiring of older employees: low mobility revisited

Ilmakunnas, Pekka and Ilmakunnas, Seija (2012): Age segregation and hiring of older employees: low mobility revisited.

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Abstract

We analyse age segregation in hirings and separations using linked employer-employee data from Finland in the period 1990-2004. This allows us to identify at the firm level employees in different age groups that have been hired during the previous year, and employees who have exited the firms. We analyze firm-level age segregation using segregation curves and Gini indices. The hirings of older employees have clearly been more segregated than exits or the stock of old employees even though hirings have become slightly less segregated towards the end of the period in question. At the same time age segregation in exits and stocks has increased and these trends are not sensitive to small unit bias in measurement. We also examine trends in hiring and exit rates using aggregate data. According to our results the oldest age group is again underrepresented in hirings. There is a positive upward trend in their recruitments related to the increasing cohort size, but it is much weaker than the trend in the relative share of older workers in employment. The exit rate of the older employees indicates cyclical variation while the small number of hirings seems to be insensitive to changing labour demand. We present a decomposition of employment change by age group and with that decomposition we disentangle the role of hirings and exits from factors related to demographics and cohort effects. The latter factors include the effect of the large baby boom generation entering the age group of older employees with higher employment rates than earlier cohorts. Finally, our regression analysis shows that larger firms are more likely to hire older employees, but their hiring rates are lower.

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