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Aging, Age Discrimination Laws, and

Age Discrimination

David Neumark
Challenge of population and age
discrimination
 Population aging combined with low employment rate of
seniors implies slowing labor force growth relative to
population, rising dependency ratio
 Fiscal challenges to public pension and disability programs
 Increased imperative to keep older people working if they can
 Imperative has generated, and will generate, policy reforms
using carrots and sticks to strengthen employment incentives
 These reforms can be frustrated by barriers to employment of
older workers – including age discrimination
Outline

 Background on age discrimination research
 Findings from three projects on age discrimination laws and
age discrimination
 Do age discrimination laws complement supply-side efforts to boost
labor supply of older workers, and if so how?
 Did stronger age discrimination laws help protect older workers during
and after the Great Recession?
 Currently, is there age discrimination in hiring?
Outline

 Background on age discrimination research
 Findings from three projects on age discrimination laws and
age discrimination
 Do age discrimination laws complement supply-side efforts to boost
labor supply of older workers, and if so how?
 Did stronger age discrimination laws help protect older workers during
and after the Great Recession?
 Currently, is there age discrimination in hiring?
Evidence for United States consistent with
age discrimination, but not decisive
 Older workers have longer unemployment durations
 Negative stereotypes in hypothetical scenarios, and in field
research tying them to adverse labor market outcomes
 Workers “self-report” age discrimination, followed by more
separations, lower employment, slower wage growth, and
reduced expectation of working past 62 or 65 (Johnson and
Neumark, 1997; Adams, 2002)
 Audit/correspondence studies point to age discrimination in
hiring (Bendick et al., 1996, 1999; Lahey, 2008a)
Age discrimination laws have probably
helped reduce age discrimination
 Earlier state laws, and later ADEA, boosted employment of
those 60 and over (Neumark and Stock, 1999; Adams, 2004) –
effect near 4 percentage points
 Likely that effect is mainly via reduced terminations
 Neumark and Stock (1999): ADEA strengthened bonds between
workers and firms by reducing opportunistic terminations (“Hands-
tying,” Jolls, 1996)
Hiring discrimination likely remains a
problem: laws ineffective?
 Discrimination laws less effective at increasing hiring (lower
damages, hard to identify class)
 Age discrimination protections could make things worse,
deterring hiring by raising termination costs (Bloch, 1994)
 Little, and conflicting evidence on whether age discrimination
laws increase hiring of older workers
Hiring dimension is critical to extending
work lives
 Much “late” employment involves leaving career job and
taking other jobs that “bridge” employment to retirement
transition (Johnson et al., 2009)
 Probably driven in part by emerging health issues and other
challenges as people age, and increased demand for leisure
(Johnson, 2014)
 Only smaller changes likely attainable if older workers are
limited to trying to stay in their long-term jobs a little longer
Outline

 Background on age discrimination research
 Findings from three projects on age discrimination laws and
age discrimination
 Do age discrimination laws complement supply-side efforts to boost
labor supply of older workers, and if so how?
 Did stronger age discrimination laws help protect older workers during
and after the Great Recession?
 Currently, is there age discrimination in hiring?
Did stronger age discrimination laws make
SS reforms more successful?
 Do changes to Social Security do more to delay retirement or
increase employment where age discrimination protections
stronger – are there policy “complementarities”?
 Estimate how changes in benefit claiming and employment,
for cohorts affected by 1983 reforms that raised FRA, varied
in states with stronger age discrimination laws
 No federal variation in age discrimination laws over this period
 But many states have stronger protections
 Neumark and Song, 2013, Journal of Public Economics
Changes in Full Retirement Age (FRA) and
SS benefits
 Social Security Act of 1935 set FRA to 65
 Eligible for reduced benefits at age 62, actuarial adjustment
to keep value of benefits the same as at FRA
 Beginning with 1938 birth cohort, FRA increased by two
months per year to 66, then a delay, then again to 67, and
benefits at age 62 declined
Predicted overall changes in claiming and
employment are confirmed
 Reductions in benefits and increases in the FRA led to
 Delayed claiming and to lesser extent increased employment
between age 62 and new FRA
 Shifting benefit claiming from 65 to the new FRA
 Sets the stage for asking whether these shifts were larger in
states with stronger age discrimination protections
Coding of state age discrimination laws
Did stronger age discrimination laws
enhance impact of increases in FRA?
 Estimate how impact of Social Security reforms differs states
with stronger age discrimination laws
 Empirical strategy is to compare responses to reforms in
states with and without stronger age discrimination laws
 Is the response bigger in states with stronger age
discrimination laws?
Stronger age discrimination laws and
effects of higher FRA on benefit claiming

Cohorts affected by SS reforms × age ≥ 62 ×
Lower firm size (< 10) -0.015

(0.025)
Larger damages -0.035

(0.027)
Cohorts affected by SS reforms × age ≥ 65 ×
Lower firm size (< 10) -0.024

(0.037)
Larger damages -0.071

(0.038)
Cohorts affected by SS reforms × age ≥ FRA ×
Lower firm size (< 10) 0.045

(0.038)
Larger damages 0.088

(0.038)
Stronger age discrimination laws and
effects of higher FRA on any employment

Cohorts affected by SS reforms × age ≥ 62 ×
Lower firm size (< 10)A -0.028

(0.020)
Larger damages 0.018

(0.025)
Cohorts affected by SS reforms × age ≥ 65 ×
Lower firm size (< 10) 0.145

(0.043)
Larger damages 0.107

(0.054)
Cohorts affected by SS reforms × age ≥ FRA ×
Lower firm size (< 10) -0.132

(0.044)
Larger damages -0.101

(0.055)
State age discrimination protections
enhanced effects of SS reforms

 In states with larger damages
 Lower claiming, increased employment of those age ≥ 62
 More shifting of employment exit from 65 to the FRA (increased
employment for those age ≥ 65, which is then offset at FRA)
 In states with lower firm-size cutoff
 Similar effects on employment as larger damages provisions in
other states
Conclusions and policy implications

 In states with stronger age discrimination protections
individuals were more responsive to increases in FRA
 Suggests strengthening federal law to mimic stronger state
laws would increase response to supply side incentives to
claim benefits later and retire later
Outline

 Background on age discrimination research
 Findings from three projects on age discrimination laws and
age discrimination
 Do age discrimination laws complement supply-side efforts to boost
labor supply of older workers, and if so how?
 Did stronger age discrimination laws help protect older workers during
and after the Great Recession?
 Currently, is there age discrimination in hiring?
Age discrimination and the
Great Recession
 Great Recession led to dramatic increases in unemployment
rates and unemployment durations for workers of all ages
 Unemployment durations of older individuals rose far more
dramatically
 Increase in unemployment durations for older workers led to
media focus on age discrimination
 Did stronger state age discrimination protections help older
workers weather the GR?
 Neumark and Button, 2014, Journal of Policy Analysis &
Management
Median unemployment durations, CPS
data
Age discrimination claims with EEOC
increased, and stayed high
Unemployment rates—older vs. prime age,
larger damages vs. not
For men, larger damages
assoc. with relatively higher
UR during and after GR
Unemployment durations—older vs. prime
age,
But shorter larger
durations
in baseline, non-
damages
For
vs.
men,
not
larger damages
recessionary period assoc. with relatively longer
unemployment durations
during and after GR
Hiring rates—older vs. prime age, larger
damages vs. not
For women, larger damages
assoc. with relatively higher
hiring rates at baseline, but
advantage declines during
and after GR
Why do age discrimination laws that reduce
age discrimination in normal times become
less effective during severe downturn?
 With severe disruptions in labor markets sorting, out age
discrimination vs. changing business conditions becomes
difficult, reducing likelihood that workers perceive age
discrimination or that claims of age discrimination can prevail
 Could be “pent-up demand for discrimination” in states with
stronger laws that firms act on during recessions
 With very uncertain demand, termination costs from AD laws
may loom large and deter hiring, yet not matter much in
other times
Conclusions and policy implications

 Results on duration and hiring suggest that in some conditions
stronger age discrimination laws may reduce hiring of older
workers
 Because reduced hiring of older workers may hasten labor force
exit for older workers near retirement, useful to think about
how to strengthen effectiveness of age discrimination laws
(including ADEA) during severe recessions
Outline

 Background on age discrimination research
 Findings from three projects on age discrimination laws and
age discrimination
 Do age discrimination laws complement supply-side efforts to boost
labor supply of older workers, and if so how?
 Did stronger age discrimination laws help protect older workers during
and after the Great Recession?
 Currently, is there age discrimination in hiring?
Audit and correspondence studies respond
to problem of distinguishing discrimination
from group differences
 Economists emphasize that a group difference in outcomes does not
imply discrimination, and can reflect other – hard to measure –
differences between the groups that affect their productivity
 In A/C studies, fictitious individuals who are identical except for race,
sex, or ethnicity apply for jobs
 Audit studies – actual testers, observe job offers
 Correspondence studies – paper/on-line applications, observe callbacks
 Evidence of group differences in outcomes – for example, blacks getting
fewer job offers than whites – is viewed as compelling evidence of
discrimination (Riach and Rich, EJ, 2002)
Especially for race, ethnicity, other minorities,
A/C study results are quite uniform
 Since 2000, 80 field experiments on traditional dimensions
of discrimination in labor (and housing) markets (Neumark
and Rich, 2016)
 Race, ethnicity, sexual orientation
 Nearly all find evidence of discrimination against minorities
Source: Zschirnt and Ruedin, Journal of Ethnic and Migration Studies, 2016
Application to study of age discrimination

 To date, audit/correspondence studies provide largely
unambiguous evidence of age discrimination in hiring
Age A/C studies: results nearly all point to
age discrimination (main studies)
Net disc. (younger applicant
favored – older applicant
Study Occupation Ages favored)
Bendick et al. (1997) Management information 57 vs. 32 26.5%*
systems (men only); executive
secretary (women only);
writer/editor
Riach and Rich (2006), Waitstaff (men only) 47 vs. 27 58.1%*
France
Lahey (2008b) Entry-level jobs (women only) 50/55/6 MA: 16.5 to 28.3%
2 vs. FL: 18.1 to 30.6%
35/45
Bendick et al. (1999) Entry-level sales or management 57 vs. 32 41.2%*

6.3 to 11.9%

Riach and Rich (2010), New graduates (women only) 39 vs. 21 59.6%*
England
Waitstaff (men only) 47 vs. 27 28.8%*
Retail managers (women only) 47 vs. 27 −29.6%*
New study to assess whether evidence is
credible (Neumark et al., forthcoming)
 Large-scale field experiment to study whether age
discrimination in hiring poses significant barrier to extending
work lives of older individuals
 Study seeks to improve on existing evidence from
audit/correspondence studies of age discrimination in hiring,
in two critical (and somewhat technical) dimensions
 Study also addresses many alternative reasons why
employers may prefer younger applicants (health, tech skills,
close to retirement, younger cohorts more educated, etc.)
 Funded by Sloan Foundation Working Longer program
Target ages

 From “working longer” perspective, interested in
those near or beyond age of eligibility for Soc. Sec.
benefits
 Main comparison is 29-31 vs. 64-66
 29-31 in line with past studies: relatively young but have begun to
build up resumes making them plausible/desirable candidates, yet not
in prime of career and less comparable to older applicants
 Also add comparisons with ages 49-51 to better
touch base with existing studies
Target occupations

 Criteria
 Employ some older and younger workers, including older recent hires
 Fairly common, so results of some generality
 Low skilled (for correspondence study design to work)
 We use four jobs
 Retail sales (retail salespersons and cashiers in Census), male and
female
 Administrative assistant (secretaries and administrative assistants;
receptionists and information clerks; general office clerks; and file
clerks), female
 Janitors, male
 Security guards (security guards and gaming and surveillance officers),
male
These occupations are important sources of
employment for older workers (CPS tenure supp.’s)

 Males, 62-70, recent hires (less than 5 years of tenure):
 In janitor jobs – 2.16% of all recent hires of 62-70 year-olds
 1.00% for security
 2.09% for retail
 Females, 62-70, recent hires:
 11.57% for administrative occupations
 3.77% for retail
Target cities

 Large number of cities so results not idiosyncratic
 Mix of cities with older vs. younger populations
 Cities with stronger vs. weaker age discrimination
laws
Creating resumes

 Two key goals
 Realistic resumes and other elements of design to make it more likely
that virtual candidates mirror real candidates and hence our results
are most reliable
 Getting valid comparisons of older and younger applicants
 Empirically grounded approach to mimic as closely as possible
what actual resumes look like
 Downloaded, scraped, and used elements from thousands of resumes
publicly available on popular national job hunting website
Applying for jobs

 Look for ads in our jobs in widely-used job posting website
 Ads read every day and potential jobs identified
 Picked entry-level jobs that did not require higher skills
 Ads requesting in-person application or requiring visit to
external website were not used
 Excludes some big employers, like Walmart, Target, and Best Buy
 Sent out over 40,000 applications, to around 14,000 jobs
(triplets of applicants of different ages)
Young (29-31) Middle (49-51) Old (64-66)
A. Administration (N=24,350, female)
Callback (%) No 85.59 89.70 92.42
Yes 14.41 10.30 7.58
Tests of independence Young vs. middle vs. old Young vs. middle Young vs. old Middle vs. old
(p-value) (0.00) (0.00) (0.00) (0.00)
B. Sales (N=5,348, males)
Callback (%) No 79.11 78.89 85.30
Yes 20.89 21.09 14.70
Tests of independence Young vs. middle vs. old Young vs. middle Young vs. old Middle vs. old
(p-value) (0.00) (0.90) (0.00) (0.00)
C. Sales (N=4,707, females)
Callback (%) No 71.32 74.13 81.57
Yes 28.68 25.87 18.43
Tests of independence Young vs. middle vs. old Young vs. middle Young vs. old Middle vs. old
(p-value) (0.00) (0.11) (0.00) (0.00)
Young (29-31) Middle (49-51) Old (64-66)
D. Security (N=4,138, male)
Callback (%) No 75.72 78.45 78.26
Yes 24.28 21.55 21.74
Tests of independence Young vs. middle vs. old Young vs. middle Young vs. old Middle vs. old
(p-value) (0.16) (0.09) (0.12) (0.93)
E. Janitors (N=1,680, male)
Callback (%) No 67.92 66.55 74.11
Yes 32.08 33.45 25.89
Tests of independence Young vs. middle vs. old Young vs. middle Young vs. old Middle vs. old
(p-value) (0.01) (0.66) (0.03) (0.01)
Overview of results

 Stronger evidence of age discrimination against workers near
retirement ages than in middle ages (past studies)
 Clear evidence of age discrimination in hiring in admin and in
sales for women
 Some evidence of age discrimination for men in sales, and for
janitor and security, but not between all three age groups
 Evidence of age discrimination stronger and more robust (i.e.,
pervasive across analyses) for women
 More ambiguous for men
Why stronger evidence of age
discrimination for women?
 Less protection because of intersectional claims?
 Physical appearance matters more for women, and age seen as
detracting from appearance more for women
 Sontag’s (1979) “double standard of aging”
 Fleck and Hanssen (2016) document large and persistent age
difference in movie roles for men and women over 90 years in
Hollywood, with more leading roles for younger women and for older
men
 Appeal to stability through so many social changes to suggest it must be
preferences
 Consistent with recent evidence in from a Chinese job board that
preference shifts from women to men with age (Kuhn and Shen, 2013)
All three studies point to potential value of
strengthening age discrimination laws
(esp. hiring!)
 #1: In states with stronger laws, more of the desired response
to supply-side Social Security reforms intended to delay
claiming and exit from employment
 #2: In severe economic downturn, age discrimination laws
appear to have been inadequate to extend protections they
offer during normal economic circumstances
 #3: Despite both federal and state laws, age discrimination in
hiring persists
 And latter two studies emphasize potential importance of
combatting age discrimination in hiring