Abstract
AbstractThis paper quantifies the importance of active job search for the probability of re‐employment, estimates the share of older job seekers that become discouraged and explore factors that may lead to discouragement. We use the sample of older unemployed welfare benefit recipients in Germany covered by the Panel Study “Labour Market and Social Security” (PASS). We find that employment transition rates are low for older job seekers: only around 11% found a job within a year. Participation in job search is an important but not a decisive factor for the transition to employment, other variables such education levels and health status are as important for the probability to transit to employment. Furthermore, more than 29.4% of individuals that did not find employment gave up the job search. We argue that a large share of these group of unemployed could be classified as discouraged. The job centre caseworkers' strategies specifically aimed at helping older job seekers to develop a new perspective in the labour market are likely to increase their probability of continuing to search for work.
Highlights
Older workers are prepared to have a longer working life
This paper quantifies the importance of active job search for the probability of re-employment, estimates the share of older job seekers that become discouraged and explore factors that may lead to discouragement
A notable feature of the survey is that it collects detailed individual-level information on labour market history, periods of unemployment and welfare benefits, reservation wages, obligations to search for a job, active participation in job search in the last 4 weeks preceding the interview, job search channels, as well as information on subjective experiences related to interactions with the job centre caseworkers
Summary
Older workers are prepared to have a longer working life. Employment at older ages has been rising since 1990th in many industrialised countries, including Germany (Börsch-Supan & Ferrari, 2018). Wileyonlinelibrary.com/journal/spol dramatic gains in longevity and health (Milligan & Wise, 2015; Börsch-Supan & Jürges, 2012) and the resulting higher work capacity of individuals (Cutler, Meara, & Richards-Shubik, 2013; Jürges, Thiel, & Börsch-Supan, 2016) Another factor is government policies aimed at restricting early retirement and extending statutory retirement age. As a reflection of these trends, recent cohorts of older workers expect to work longer than previous cohorts (Coppola & Wilke, 2014; Hess, 2018) These developments are likely to significantly alleviate economic and fiscal effects of population ageing (Maestas & Zissimopoulos, 2010) and, at the same time, contribute to a higher well-being of older workers and possibly improve their health (Rohwedder & Willis, 2010; Behncke, 2012).
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