Did Age Discrimination Protections Help Older Workers Weather the Great Recession?
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Abstract
We examine whether stronger age discrimination laws at the state level moderated the impact of the Great Recession on older workers. We use a difference-in-difference-in-differences strategy to compare older workers in states with stronger and weaker laws, to their younger counterparts, both before, during, and after the Great Recession. We find very little evidence that stronger age discrimination protections helped older workers weather the Great Recession, relative to younger workers. The evidence sometimes points in the opposite direction, with stronger state age discrimination protections associated with more adverse effects of the Great Recession on older workers. We suggest that this may be because during an experience like the Great Recession, severe labor market disruptions make it difficult to discern discrimination, weakening the effects of stronger state age discrimination protections, or because higher termination costs associated with stronger age discrimination protections do more to deter hiring when future product and labor demand is highly uncertain.
Key Findings
- An increase in age discrimination may underlie the dramatic increases in unemployment durations for older workers during and after the Great Recession.
- In states with stronger age discrimination protections, older workers generally experienced worse labor market outcomes, relative to young workers, during and after the Great Recession.
- Age discrimination laws may become less effective during times of economic turbulence when discrimination can be more difficult to discern, and such periods may even encourage employers more constrained from age discrimination in normal times to take advantage of this economic turbulence.
- It may be important to strengthen the effectiveness of age discrimination protections in times of economic turbulence.
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Paper ID
WP 2013-287Publication Type
Working Paper