Is Retirement Encouraged by the Employer? Retirements and the Human Capital and Age Structure at the Company Level

Daniel Hallberg, Institute for Futures Studies

Employer characteristics and labor demand measures are less often taken into account in the study of retirement. It is nevertheless plausible that the decision to retire is a joint decision on the parts of the employee and the employer, and that it is sometimes encouraged by the employer. Using a large longitudinal employer-employee matched dataset, the objective in the present paper is to study how the company’s economic performance affects early retirement and the hiring of older workers in Sweden. Preliminary results indicate that, in contracting firms, the likelihood of retirement increases with falling firm profitability. For such firms there is also a positive interaction effect between the firm’s profitability and the wage level of the older worker. Improved profitability is thus linked to a higher relative risk of retirement among high wage earners compared to low wage earners when the firm is reducing its staff.