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

Abstract

This paper analyses the impacts of work incentives, socio-demographic characteristics andbehavioural factors on mature age employment participation decision. A decompositionanalysis is performed to determine whether the lower participation of mature age persons isdue to an endowment effect or a behavioural effect. The endowment effect represents the roleof work incentives and socio-demographic characteristics as determinants of employmentparticipation; the behavioural effect represents the role of preferences of mature age workersor age discrimination that impedes access to suitable job and career prospects. The workincentive findings indicate that mature age males and females have higher replacement ratesthan prime age males and females. However, the employment participation of mature agemales and females appear to be less sensitive to changes in replacement rates than theiryounger counterparts. The results from the decomposition analysis confirm that mature agepersons are less endowed with characteristics that favour employment participation thanprime age persons. However, their lower employment participation outcomes are stillprimarily due to behavioural, rather than endowment, effects.