NCPA - National Center for Policy Analysis

Elderly Unemployment

July 26, 2001

Little is known about the effects of job loss among older workers. A recent article in the Journal of Labor Economics attempts to fill this gap by examining the employment patterns of older American workers who lost their jobs between 1992 and 1996.

The paper finds that there was a rise in the rate of job losses among older workers. For workers over 55 years of age, the three-year job loss rate rose from 11 percent in the early 1980s to 16 percent in the mid-90s. Losing a job at an older age has serious consequences largely because finding another one can prove quite challenging due to age discrimination and other factors. Also, unemployment forces older workers to draw upon their retirement savings early.

The paper finds that:

  • While displaced workers in their fifties have a 70 percent to 75 percent chance of finding a job within two years of losing one, their new employment is often short lived.
  • Men aged 56-60 years of age are estimated to have twice the chance of losing their new job within a year, compared to non-displaced men of the same age.
  • Only 61 percent of displaced men and 55 percent of displaced women in their mid-50s are found to be employed two years after a job loss.
  • Workers who lose a job at the age of 55 are roughly 10 percent more likely to be still working at age 69, compared to their colleagues who were not laid off.

The authors conclude that losing a job at an older age creates a long unemployment spell, followed by short-lived job tenure, and a postponed retirement.

The difference in unemployment rates between older workers and younger ones is not due to differences in ability, say researchers.

Source: "Job Loss at an Older Age," Economic Intuition, Winter 2001; based on Sewin Chan and Ann Huff Stevens, "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, Forthcoming.


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