Age Discrimination in US Labor Markets: A Review of the Evidence

Abstract

We review the existing evidence on age discrimination and its effects in U.S. labor markets. First, we look at attempts to describe the attitudes in the workplace toward older individuals and how these may affect managerial decision making. Second, we review the types of cases filed with the Equal Employment Opportunity Commission (EEOC) and assess whether this tells us anything about the nature and effect of age discrimination. Third, we document the disadvantageous positions of older individuals in the labor force in terms of certain labor market barometers, including hiring, unemployment duration, re-employment wages, and promotion. Finally, we look at attempts to assess whether the disadvantageous position is the result of discrimination on the part of employers. Despite many conflicting results and alternative interpretations of those results, we are able to draw several conclusions about age discrimination in the United States. First, the industrial gerontology literature and the industrial psychology literature have produced more than a handful studies showing that age is considered when making decisions about the relative worth of job applicants. Attitudes about older workers are considered in promotion decisions as well. Second, the thousands of ADEA cases that are resolved and deemed worthy of merit by the EEOC indicate that age discrimination - at least as defined and recognized by the law - is an ongoing phenomenon in U.S. labor markets. Third, while older workers perform relatively well in the labor market in terms of wages and employment, they perform poorly in terms of unemployment duration, the probability of getting hired, their incidence of displacement, and the consequences of displacement in terms of re-employment earnings. Fourth, studies that estimate the link between age discrimination and adverse outcomes tend to find evidence of such a link. However, some of these studies have difficulty ruling out alternative explanations.