The hiring of older workers: evidence from Germany

Abstract

This article analyses how hiring older workers adjusts to demographic change in the labour force by using information from more than 500,000 firms in Germany. We find robust evidence that firms faced with an ageing labour market hire relatively more older workers. However, the pace of this adjustment is relatively slow, particularly when ageing happens outside the firm. The tendency to employ older people is more considerable in East Germany, where the demographic change moves forward faster. Furthermore, part-time working models support hiring older workers, but this effect becomes less important in larger firms and East Germany. Finally, while partial retirement regulations enhance flexibility within the firm, they, unfortunately, diminish the employment opportunities for older external job seekers.