Abstract
Abstract This article investigates how a firm’s workforce characteristics affect an individual’s timing of exit from the labor market. It analyzes the relations between the age, skill, and wage structures of companies and the risk of labor market exit of Finnish older workers by using the detailed longitudinal register-based Finnish Linked Employer–Employee Data. The study follows the Finnish working population born between 1942 and 1950 (N = 216,713). Multilevel discrete-time survival analysis with individuals nested in firms is applied to estimate the risk of permanent exit from work between the ages of 53 and 68. The results show that these risks differ between firms: greater diversity in age and education levels among the workforce as well as seniority-based wage systems within a firm decrease the propensity of early exit, while being employed at a firm with an older staff increases the risk of exit. The findings from interactions between individual- and firm-level characteristics further illustrate that one’s individual characteristics matter in relation to the characteristics of the overall firm’s workforce. Being dissimilar from one’s coworkers, especially in terms of skills and education, can reduce the risk of early exit.
Highlights
Labor market exit of older workers is usually treated as the outcome of a combination of national policies and individual factors
We investigate whether some workplaces are more conducive to retaining or exiting their older workers due to differences in their staff’s age, skill and wage structures
We investigate the risk of labor market exit of Finnish older workers in the private sector between the years 1997 and 2015 with the use of linked employer-employee data and multilevel models
Summary
Labor market exit of older workers is usually treated as the outcome of a combination of national policies and individual factors. Often the ‘missing actor’ in retirement research (Vickerstaff, Cox, & Keen, 2003), the firm plays an important role in translating national policies into individual practice, while creating work environments where older workers would like to either stay or leave. This role can be explicit and direct, especially in pension systems where there is no default retirement age and pension schemes are voluntary and company-based (Beck, 2013; Vickerstaff & Cox, 2005). Firms differ in the size, characteristics and composition of their workforces, which, one the one hand, creates a variety of resources and restrictions for employers to retain or exit older workers and, on the other, provides different possibilities and incentives to older workers in decisions about their exit from the labor market
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