Countries for Old Men: An Analysis of the Age Wage Gap

Abstract

Drawing on extensive administrative and survey data, this study illustrates the growing wage disparity between older and younger workers in high-income countries. Our analysis pinpoints negative career spillovers as the driving factor, as an increasing number of older workers, a higher retirement age, and constraints on firms' ability to create higher-ranked positions restrict younger workers' access to higher-paying roles. As older workers enjoy lengthier, successful careers, younger workers face lower initial wages, slower career progression, more frequent turnover with lesser financial gains, and decreased likelihood of working for higher-paying firms. We conclude by connecting these outcomes to other labor-market trends.

Keywords: wage growth, age wage gap, career spillovers, older workers, labor-market entry

JEL Classification: J31, J21, M51, J11