Age Differences in Job Displacement, Job Search, and Reemployment

Abstract

Working longer is often hailed as the best way to increase retirement incomes, yet this strategy depends crucially on seniors' ability to find work and hold on to their jobs. This study examines how the incidence and consequences of job displacement vary by age. Data come primarily from the 1996, 2001, and 2004 panels of the Survey of Income and Program Participation (SIPP), which follow respondents for up to 48 months. The data span the years 1996 to 2007, covering the 2001 recession but not the 2007-2009 recession. Results show that older workers are less likely than younger workers to lose their jobs, but only because they generally have spent more time with their employers. When older workers lose their jobs, they appear to have more trouble than their younger counterparts finding work. Compared with their counterparts ages 25 to 34, displaced men ages 50 to 61 are 39 percent less likely to become reemployed each month and displaced women ages 50 to 61 are 18 percent less likely. When older displaced workers find jobs, they typically experience sharp wage declines. Among displaced men who become reemployed, for example, the median hourly wage on the new job falls 20 percent below the median wage on the old job at ages 50 to 61, compared with only 2 percent at ages 25 to 34. These findings suggest that some employers are reluctant to hire older workers, and raise questions about the employability of older adults.