Mature age employment participation: an analysis of the roles of work incentives, endowment and behaviour

This paper analyses the impacts of work incentives, socio-demographic characteristics and behavioural factors on mature age employment participation decision. A decomposition analysis is performed to determine whether the lower participation of mature age persons is due to an endowment effect or a behavioural effect. The endowment effect represents the role of work incentives and socio-demographic characteristics as determinants of employment participation; the behavioural effect represents the role of preferences of mature age workers or age discrimination that impedes access to suitable job and career prospects. The work incentive findings indicate that mature age males and females have higher replacement rates than prime age males and females. However, the employment participation of mature age males and females appear to be less sensitive to changes in replacement rates than their younger counterparts.

The results from the decomposition analysis confirm that mature age persons are less endowed with characteristics that favour employment participation than prime age persons. However, their lower employment participation outcomes are still primarily due to behavioural, rather than endowment, effects.

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