Gerontocracy in Motion? – European Cross-Country Evidence on the Labor Market Consequences of Population Ageing



Gerontocracy in Motion?

27


Figure 6

Age-Employment Probability Profile in EU-15 Countries

Deviation of mean employment probability in %-points

Authors’ calculations from ECHP.

Age in Years


RWI

ESSEN

of the estimated marginal effects, with t-values greater than 1.96 indicating sta-
tistically significant estimates at a 95 % confidence level.

Before we address the issue of generational crowding, we briefly discuss our
results regarding the included covariates. Throughout the EU women display
considerably lower employment rates, with a point estimate of nearly 27 per-
centage points. Clearly, highly educated individuals are much more likely to be
employed than individuals with medium or even low education. These dis-
crepancies are less pronounced for men, providing an indication for the rele-
vance of participation issues for the labor market behavior of women. Simi-
larly, disabled men experience disproportionately low employment rates. This
pattern is quite consistent with a voluntary withdrawal of women from the la-
bor force in case of health problems.

Regarding the life-cycle profile of employment rates, our estimates indicate
that an initial phase of increasing employment propensities - individuals final-
izing their human capital investments and entering the labor market - is typi-
cally followed by a plateau phase of labor force participation and employment
during core-age years and then by a pronounced decline in employment prob-
abilities for the oldest age-group (55-64 years). This estimated life-cycle pat-
tern is depicted graphically in Figure 6.

Our emphasis is on the variables measuring demographic change, reported in
Table 3. Regarding the independent effect of cohort size, our estimation re-



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