Matthew Gudgeon
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Matthew Gudgeon
@matthewgudgeon.bsky.social
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Economist @ Tufts University. Applied Micro, Labor Economics. http://www.matthewgudgeon.com
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The Deutsche Post Foundation is undergoing a period of change and has decided to reorganize its research institutes. This involves changes in the strategic direction of both the IZA Institute of Labor Economics and the briq Institute on Behavior & Inequality as well as in the funding of the research institutes. As part of this transformation, the briq Institute will be integrated into IZA, and the Berlin location of IZA will be closed down. As a consequence of these developments, the current CEO of IZA, Simon Jäger, has decided to depart from his leadership role at IZA by the end of 2023 in mutual agreement with the Deutsche Post Foundation. Both IZA and the Deutsche Post Foundation regret this decision and would like to express their gratitude to Simon Jäger for his exceptional work and his contributions to the further development of IZA. Effective January 1, 2024, Armin Falk, the current CEO of the briq Institute, will take over the leadership of IZA.
November 10, 2023 at 11:32 AM
matthewgudgeon.bsky.social
11. This matters:  Based on estimates for younger workers or more recent workers, we wouldn’t have expected historical PBD extensions to explain the distinctive 10pp rise in the unemp rate of older workers in the 90s. Instead, due to ret. policies, they explain over 50% of the rise.
Panel a) shows that the simulated unemployment rates of older workers would be substantially smaller had PBD remained at 12 months instead of increasing to 32 months. There is less of an effect on slightly younger workers. Panel b) shows that the unemployment rates of older workers would have been much lower had retirement via UI not been allowed at age 60 (and instead only allowed starting at age 63).
November 2, 2023 at 12:27 PM
matthewgudgeon.bsky.social
9. Our model fits the key patterns in the data as well as the key trends in the unemployment rate for workers aged 52-55 and 56-59.
These show that the model simulations for both employment-to-unemployment transitions for the 1935 birth cohort and for non-employment duration fit their empirical counterparts well, matching the inflow spike and other broad patterns. This figure plots the empirical and model-simulated unemployment rates of workers aged 52-55 and 56-59 separately. The model broadly captures the empirical trends, matching the large differential spike in the unemployment rate of relatively older workers in the 1990s.
November 2, 2023 at 12:24 PM
matthewgudgeon.bsky.social
5.First we present reduced form evidence showing that older workers UI inflows spike at precisely the bridge-to-retirement age, i.e. the age that allows workers to transfer directly from UI to pension without any uncovered period.  Inflows adjust as expected as PBDs increase.
These two figures show that for the 1924 birth cohort, UI entries spike at age 59, and for the 1935 cohort, UI entries spike at age 57 and 4 months.
November 2, 2023 at 12:19 PM
matthewgudgeon.bsky.social
4. We show this in Germany, where reforms over four decades provide essential policy variation on both UI maximum potential benefit duration (PBD) and retirement rules.  And where historical unemp. rates of older workers have exhibited a distinctive and hard-to-explain pattern.
This shows the unemployment rate for workers in different age groups in both the USA and Germany over time. In the US. unemployment rates largely co-vary for the different groups, in Germany, the unemployment rates of workers aged 55 to 59 diverge from the rest, reaching 15% in the mid 1990s (other groups stay at 8% or so).
November 2, 2023 at 12:18 PM