Unemployed older workers versus prime age workersDifferences in their re-employment determinants in Spain

Resumen

The aim of this paper is to assess empirically whether the re-employment problems that older unemployed workers face in Spain are di.erent from those of prime age unemployed workers, and if they are, to detect whether these di.erences emerge from di.erences in characteristics or attitudes of the workers, from the unwillingness of employers to hire older workers, or from both. The analysis has been done using the methodology of duration models and a control group of Spanish prime age workers has been used to allow comparative analysis. The data we use are from a longitudinal sample taken from the Spanish Current Population Survey ("EPA enlazada"). The period we analyze if 1992:1-1997:2. Results concerning supply e.ects suggest that older workers re-employment probabilities are more negatively a.ected by unemployment benefits, which is reasonable to expect given that older workers are observed to have had longer tenure in the past job and hence they are likely to enjoy longer benefits. In the second place, we find that old high educated workers find more di.culties to find a job that low educated ones, which may be understood at least partly as a result of the more educated ones having higher reservation wages than the low educated ones. With respect to the demand side of the market, we find that older workers face lower re-employment opportunities in expansionary periods than their prime age counterparts. Having already controlled for supply characteristics, this result is telling us that employers are more willing to hire a young worker than an equally productive old worker, which is consistent with predictions of theoretical models that assume increasing compensation profiles as workers ages and decreasing productivity profiles. (JEL J14, J64).