Principal investigator: Bruno Benevit
Original title: Is It Harder for Older Workers to Find Jobs? New and Improved Evidence from a Field Experiment
Authors: David Neumark, Ian Burn and Patrick Button
Location of the Intervention: United States
Sample Size: 40.000 job applications
Sector: Labor Economics
Primary Variable of Interest: Response to job applications
Type of Intervention: age group
Methodology: probit
Summary
Employee selection can involve various forms of discrimination, notably related to race or gender. However, in this context, the economic literature has also paid attention to age discrimination (ageism) in the hiring process. To examine this form of discrimination, this study applied a resume matching experiment in order to mitigate possible biases observed in previous studies. The results presented robust evidence of age discrimination in the hiring of older women, with a strong emphasis on the age group close to retirement age. Although evidence of discrimination against men was also observed, the results were considerably less significant.
- Policy Problem
Longer periods of unemployment among older workers have long been considered as potentially reflecting hiring discrimination against older workers (NEUMARK; BURN; BUTTON, 2019). Given the current aging populations, understanding and identifying this problem is crucial. Several studies analyzing this topic have adopted the audit or matching (AC) methodology to verify the existence of this phenomenon.
Typically, studies that apply career discrimination methods to evaluate this topic conduct a resume submission experiment, matching candidates' characteristics except for age. However, this methodology disregards the incentives faced by older workers to disclose low experience on their resumes, information that can be seen negatively by this type of candidate. This situation indicates distinct behaviors between younger and older workers, implying potential sources of bias when adopting this approach. Thus, to investigate the dynamics involved in this form of discrimination, it is necessary to consider the specificities inherent to this problem.
- Policy Implementation Context
Population aging is a phenomenon that has significant impacts on various aspects of society, including the labor market and social security systems. In many countries, such as the United States and several others, the increasing proportion of elderly people in the population is creating fiscal challenges for social security systems. This is partly due to the lower employability of older workers, resulting in a reduced tax base and, consequently, less revenue for social security programs. Furthermore, this type of discrimination can be especially harmful when older people wish to transition to part-time jobs or return to work after a period of retirement.
In the context of the United States, anti-discrimination law Age Discrimination in Employment Act (ADEA) establishes sanctions for discriminatory conduct against workers over 40 years of age. Simultaneously, there are economic costs associated with compliance with the law. According to the authors, it has been estimated that the costs of potential and actual hiring cases under ADEA are approximately US$3,29 billion per year, which equates to approximately US$5.300 per company covered by ADEA, or approximately US$35 per employee covered (NEUMARK; BURN; BUTTON, 2019).
- Evaluation Details
For the AC experiment, resumes were created incorporating various observable characteristics commonly associated with the likelihood of returning for job interviews. To establish parameters similar to those observed in reality, more than 25,000 resumes from a job search website were considered. Twelve cities were selected by category according to the prevalence of inhabitants aged 62 or older and the sanctions resulting from discriminatory practices in the hiring process. In total, the experiment involved applications for more than 40,000 job openings.
The resumes were created considering job openings with a significant presence of young and senior workers with low levels of experience, according to... Current Population Survey (CPS). Additionally, the most prevalent occupations were defined according to what was observed by sex. The first and last names in the resumes were defined in a way that indicated that the applicants were Caucasian, aiming to isolate the analysis from the age aspect. In order to simulate a feasible scenario, the resumes presented three stories defined subjectively according to each city-occupation pair. Each resume was generated and submitted together with two other resumes differentiated by age (randomly), comparable experience, or career transition point described in the resume stories (beginning, middle, and end of career).
- Method
The study applied several models to verify whether the age range of workers influences the probability of return. To this end, different specifications were considered based on the characteristics available in the resumes created and submitted in the AC experiment, presenting estimates for all resumes and for each job-gender group.
Among the characteristics included in the covariate vector of the models, the binary variables identifying the age range of the workers represented in the resumes were considered: (i) young workers (29-31 years), (ii) middle-aged workers (49-51 years), and (iii) senior workers (64-66 years). The remaining resume characteristics considered involve years of experience, gender, career transition periods, completed higher education, fluency in Spanish, being named "employee of the month" in the most recent job, participation in volunteer work, absence of typographical errors in the resume, two specific skills for the desired position, and the city of the desired position.
The main analysis considered a simple model, proposing to directly identify the existence of age discrimination by observing resume return rates. Concurrently, Fisher's independence test was applied in relation to the candidates' age and return rates. The purpose of the test was to verify the existence of differences in return rates between each of the three categories, comparing the three together (young vs. middle-aged vs. seniors) and the three possible pairs of categories (young vs. middle-aged, young vs. seniors, middle-aged vs. seniors).
Furthermore, Probit models with various specifications were estimated. Initially, a model was estimated to verify the effects on the coefficients associated with each of the three age groups. Subsequently, a model was estimated comparing the results between older and younger candidates, depending on whether the resumes of older candidates show the same low experience as the resumes of younger candidates or, instead, experience compatible with their age. To this end, the presence of a difference between resumes with low experience and those with high experience/no career transition was verified.
- Main results
The results of the main analysis showed strong evidence of discrimination between the younger group and the older group (middle-aged and seniors). Overall, compared to the resumes of young people, the return rate of resumes from middle-aged and seniors was 18% and 35% lower, respectively.
Specifically analyzing the return rates for each job-gender, heterogeneity was observed in the degree of discrimination among the desired positions. The greatest difference was observed in applications from women for administrative positions, where return rates were 29% and 47% lower for middle-aged and senior candidates, respectively. Regarding applications from men for security and janitorial positions, evidence of discrimination between young and senior candidates of approximately 10% and 20%, respectively, was observed. The results for sales positions, the only position considered for both men and women, indicated discrimination and differences in magnitude between the sexes. Compared to applications from young people for sales positions, return rates were 10% lower for middle-aged women and 35% lower for senior women, while for men, differences were only identified in the return rates of seniors (30% lower compared to young people).
In general, for all positions considered, the Probit model results revealed that return rates for older candidates were consistently lower than for younger candidates. Estimates of return rates for middle-aged candidates showed between 2,7 and 3,5 percentage points (pp) less, while the coefficient associated with senior resumes indicated a reduction of 5,4 to 6,2 pp. The estimates revealed that the results were not affected by the two types of differences in the professional trajectories of older candidates, nor by the measure of experience considered, except for applications for janitorial positions – in this case, being significant only in cases where the experience of seniors is equal to that of young people. The results considering a heteroscedastic Probit model were similar to those observed in the previous model, but maintaining the robustness of the results only for the coefficients associated with women.
- Lessons in Public Policy
This article investigated the existence of age discrimination in the United States labor market by observing the return of resumes from over 40.000 job applicants. Using a matching experiment, resumes were created for three age groups (young, middle-aged, and senior) to observe this type of dynamic, where the oldest age group was found to be close to retirement age (64-66 years).
The results found in this study indicate the existence of age discrimination, such that resumes from younger candidates were more likely to receive some response compared to middle-aged and, to a greater extent, senior candidates. Furthermore, it was observed that the positions analyzed for women presented more prevalent and higher discriminatory impacts when compared to the positions held by men. The evidence from this study highlights the importance of anti-discrimination policies and contributes to understanding how ageism occurs in the labor market, primarily impacting workers nearing retirement age.
References
NEUMARK, D.; BURN, I.; BUTTON, P. Is It Harder for Older Workers to Find Jobs? New and Improved Evidence from a Field Experiment. Journal of Political Economy, v. 127, no. 2, p. 922–970, apr. 2019.
