Technology, labour market institutions and early retirement: evidence from Finland
Among various barriers to increasing employment of older workers, this paper focuses
on two notable ones that are relevant for the future of work. First, older workers
engaged in codifiable, routine tasks are particularly prone to the risk of being displaced
by computers and robots. Second, several countries have in place various labour market
institutions that encourage early retirement, such as exceptional entitlements or
looser criteria for unemployment and disability benefits applied to older individuals.
This paper presents evidence that these two factors reinforce each other to push older
workers out of employment. It is found that older workers who are more exposed to
digital technologies are more likely to leave employment, and that this effect is
significantly magnified when they are eligible to an extension of unemployment benefits
until they start drawing old age pension. Furthermore, a simple simulation based on
the empirical findings illustrates that a reform that tightens the eligibility for
the benefit extension would increase mostly the employment of older workers that are
more exposed to digital technologies.
Published on March 05, 2021
In series:OECD Economics Department Working Papersview more titles