Do employment promotion policies affect employment or job transfer among older adults? Evidence from Japan

In most rapidly ageing industrialised countries, ageing problems have become an important social issue. In Japan, owing to the rapidly ageing population, the government has been intervening in both the demand side and supply side of labour to increase employment of older adults. This study examines labour supply responses to the increasing pension eligibility age and labour demand responses to company expansion and the abolition of the employee selection mechanism. This study is based on Japanese longitudinal survey data (Keio Household Panel Survey) from 2008 to 2018. Since employment law revisions and social security revisions are inextricably linked, one way to examine the effect of revisions to both simultaneously is to investigate them by cohort. The difference-in-difference model was used to compare revision-affected cohorts born between April 1953 and January 1956 and unaffected cohorts born between April 1949 and March 1953. It was found that the revisions had almost no impact on the employment of older adults and their receipt of pensions. However, they did have significant positive effects on job transfers and resignations. Hence, although the system was modified, it also gave companies the option of placing older adults in associated companies and of retaining some routes for older adults to retire, much as before the revisions.