Did the Intergenerational Solidarity Pact Increase the Employment Rate of Older Workers in Belgium? A Macro-Econometric Evaluation

36 Pages Posted: 4 Sep 2015

See all articles by Muriel Dejemeppe

Muriel Dejemeppe

Catholic University of Louvain - School of Economic and Social Research

Catherine Smith

Catholic University of Louvain (UCL)

Bruno Van der Linden

Université Catholique de Louvain - Institut de Recherches Economiques et Sociales; IZA Institute of Labor Economics

Abstract

In December 2005, the Belgian government adopted the law on the Intergenerational Solidarity Pact (ISP) aiming at increasing the employment rate of older workers. The main policies of the ISP consist in a pension bonus, reductions in employers' social security contributions and measures discouraging early retirement while encouraging working time reductions at the end of the career. We aim at evaluating the overall effectiveness of the ISP in rising the employment rate of older workers. To that purpose, we compare the actual evolution of the employment rate after the implementation of the policies to its predicted (counterfactual) evolution based on the estimation of a macroeconometric model in a period prior to the ISP. The results suggest a slight positive impact of the ISP on the employment rate of older workers but to the detriment of the younger workers. However, there is a lack of statistical power to draw firm conclusions on the overall effect of the ISP.

Keywords: aging, evaluation of labor market policies, macro-econometrics

JEL Classification: J21, J26, H53, E32

Suggested Citation

Dejemeppe, Muriel and Smith, Catherine and Van der Linden, Bruno, Did the Intergenerational Solidarity Pact Increase the Employment Rate of Older Workers in Belgium? A Macro-Econometric Evaluation. IZA Discussion Paper No. 9115. Available at SSRN: https://ssrn.com/abstract=2655064

Muriel Dejemeppe

Catholic University of Louvain - School of Economic and Social Research ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium
+32 10 47 41 00 (Phone)
+32 10 47 39 45 (Fax)

Catherine Smith

Catholic University of Louvain (UCL)

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

Bruno Van der Linden (Contact Author)

Université Catholique de Louvain - Institut de Recherches Economiques et Sociales ( email )

3, Place Montesquieu
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://perso.uclouvain.be/bruno.vanderlinden/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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