Are older workers overpaid? A literature review

Paul de Hek, Daniël van Vuuren

Research output: Contribution to journalArticleScientificpeer-review

Abstract

It is widely believed that wage and productivity profiles of individual workers do not coincide at all ages. We give an overview of the theories which provide a rationale for this, and discuss the empirical literature. Human capital theories typically imply that wages rise with tenure, so that job reallocation at old age would imply a wage cut. Incentive theories typically imply that wages exceed productivity at the end of a worker’s career. Bargaining power of unions may also lead to ‘overpayment’ of older workers. Some general conclusions regarding the wages of older workers are formulated on basis of the authors’ reading of the empirical literature.
Original languageEnglish
Pages (from-to)436-460
JournalInternational Tax and Public Finance
Volume18
Issue number4
DOIs
Publication statusPublished - 2011
Externally publishedYes

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Wages
Older workers
Literature review
Productivity
Workers
Bargaining power
Human capital theory
Rationale
Old age
Tenure
Incentives
Job reallocation

Cite this

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Are older workers overpaid? A literature review. / de Hek, Paul; van Vuuren, Daniël.

In: International Tax and Public Finance, Vol. 18, No. 4, 2011, p. 436-460.

Research output: Contribution to journalArticleScientificpeer-review

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