Policy Research Working Paper 10636
Productive Longevity
What Can Work in Low- and Middle-Income Countries?
Sara Johansson de Silva
Indhira Santos
Social Protection and Jobs Global Practice &
Health, Nutrition and Population Global Practice
December 2023
Policy Research Working Paper 10636
Abstract
The world’s population is aging at dramatic speed. By 2050, higher labor force participation and productivity among
most of the world’s seniors (aged 65+) will be living in what mature workers. This paper presents a framework identify-
are currently low- and middle-income countries. Aging will ing market, institutional, and behavioral failures that create
require low- and middle-income countries to develop com- constraints to productive longevity, and policies that may
prehensive policy solutions to sustain welfare levels and overcome these constraints. Drawing, to the extent possible,
ensure that welfare is equitably distributed across genera- on the experience of low- and middle-income countries,
tions and socioeconomic groups. Given higher informality the paper reviews evidence on supply-side and demand-
and lower human capital levels in low- and middle-income side interventions to improve incentives, remove barriers
countries than more advanced economies, the balance and to work, and invest in skills, as well as policies to improve
composition of the policy package in these contexts may matching of mature workers in labor markets. The paper
differ, but there will be a common need for labor market ends with a discussion of meta-lessons for low- and mid-
policies to increase “productive longevity”—that is, to foster dle-income countries.
This paper is a product of the Social Protection and Jobs Global Practice and the Health, Nutrition and Population Global
Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to
development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://
www.worldbank.org/prwp. The authors may be contacted at sjohansson@worldbank.org or isantos@worldbank.org.
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development
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Productive Longevity
What Can Work in Low- and Middle-Income Countries?
Sara Johansson de Silva & Indhira Santos
JEL: J08, J14, J24, J26, J71
Topics: Aging, Labor Productivity, Employment Incentives and Labor Supply, Skills
1. Productive longevity in an aging world1
Old age is like everything else. To make a success of it, you've got to start young.
Theodore Roosevelt
The world’s population is aging at a dramatic speed, raising concerns about how to maintain income
and productivity growth, improve the welfare of older people, and help them contribute to society.
By 2050, one in six members of the world’s population will be at least 65 years of age, compared to
fewer than one in 10 today. Nearly four out of five of these seniors will be living in what are currently
low- and middle-income countries (L/MICs).2 Aging will imply shrinking working populations relative
to dependents, which will reduce economic growth if other factors—particularly productivity and
employment rates—do not change. Aging is also likely to require higher public and private
expenditures for health and long-term care (LTC) services. These demographic tides prompt a need
for policies that can sustain welfare levels and ensure that welfare is equitably distributed across
generations and socioeconomic groups. Labor market policies that help extend productive working
lives and increase the labor force participation and productivity of older workers – “productive
longevity” – are part of this important agenda. This paper identifies a set of labor market-related
policies that can address key constraints to productive longevity in L/MICs and provides some
preliminary evidence on their effectiveness.
Policies supporting aging populations in remaining healthy, skilled, and economically active have
positive impacts across generations. Seniors who are in good physical and mental health and remain
in the labor force help maintain the size of the workforce and prevent labor dependency ratios – the
ratio of the population not working to that of the population working – from increasing. Harnessing
the productivity of these mature workers boosts the pool of human capital, that is, the health and
skills that ensure productive work. The gains can be substantial: estimates suggest that Greece could
increase GDP by a staggering 23 percent by increasing employment levels of the 55+ age group to
those of New Zealand.3 And productive longevity does not appear to crowd out younger workers from
labor markets, what economists refer to as the “lump of labor fallacy.” Looking at Organisation for
Economic Cooperation and Development (OECD) countries, higher employment rates for seniors in
fact coincide with higher employment rates for youth,4 and there is some evidence from the United
States and Japan that higher senior employment is correlated with higher wages for younger workers.5
At the firm level, mixed-age teams have been shown to have higher productivity than age-
homogeneous teams, supporting the notion that older and younger workers are, on average,
complements rather than substitutes.6 Conversely, if seniors leaving employment deplete the market
1 The authors are grateful to Victoria Strokova and George A.O. Alleyne for comments and suggestions on a draft
version of the paper and to Gustavo Demarco, Elena Glinskaya, and Victoria Levin for very helpful comments
and suggestions on an early version. An earlier version of this paper was prepared as a background paper for the
Healthy Longevity Initiative.
2 United Nations 2019.
3 PWC 2018.
4 Böheim and Nice 2019, Gruber et al. 2009, and Munnell and Wu 2013.
5 Kalwij et al. 2010.
6 Göbel and Zwick 2013.
2
of relevant skills, skill shortages may lead firms to automate production processes to a higher degree,
which could instead lead to job destruction across generations.7
Supporting productive longevity can also help individuals increase their healthy years of living. At
the individual level, there is substantial evidence that working in older age, in the right circumstances,
can create a virtuous circle of healthy living and productive work. Research focused on high-income
countries (HICs) shows that opportunities for voluntary part-time paid work, as well as volunteering
activities, can contribute to strengthening physical and mental health at older age, including for people
over 80 years of age.8 The Gallup World Poll shows that working full-time or voluntarily part-time in
older age, as opposed to being retired, is correlated with higher levels of reported happiness.9
Policies focusing on productive longevity are part of a broad policy agenda addressing aging and
welfare challenges. First, actions across many different policy areas will be needed to boost growth,
inclusive job opportunities, and social protection, while managing macroeconomic and fiscal
conditions. These include policies relating to education and life-long learning, health and care systems,
labor migration and labor market regulations, social protection systems, taxation policy, innovation
policy, and more. Second, policies also need to target all generations: promote longer working lives
for those able to work productively, invest in younger generations to raise productivity over entire
working lives, and enhance social protection for those who can no longer work. This is particularly the
case in L/MICs, where human capital levels are lower and intergenerational human capital gaps across
generations larger, compared to HICs. Investing at scale in low-productivity mature workers would
likely be very costly compared to investing in children and youth. Today’s adults are tomorrow’s
elderly, and early investment in skills development is associated with a strong positive impact on
health, which in turn contributes to later retirement.10
While recognizing the need for broad policy packages, the paper is focused on policies that enable
and incentivize older workers in L/MICs to remain active, and that can raise the productivity of their
work further. As will be discussed in more detail below, in L/MICs, many older people, often even the
majority, work for themselves or their families in the informal sector, in low-productivity employment
and without social security. Raising their productivity and providing protection are critical challenges.
Given largely underdeveloped social protection systems in low-income countries (LICs) and many
middle-income countries (MICs), policies relating to taxation, labor regulations, and formal social
protection programs have limited reach. For the group of relatively better-off workers, often in the
formal sector, different labor market policies and social security system incentives and barriers can
matter, however. A focus on this group is likely to yield greater results for this set of policies, as it is
arguably less expensive and easier to extend working lives than renew or start working lives at mature
ages, particularly after a long period of absence from the labor market. In what follows, we will refer
to “mature workers” approaching retirement as the target age group.
There are specific growth and employment opportunities associated with aging. Low aggregate labor
demand in the formal sector, including for older workers, is often a critical problem to productive
employment growth in many L/MICs. Aggregate demand-side constraints limit the reach of supply-
side policies aiming at incentivizing productive employment, for older workers and others. This said,
7 Acemoglu and Restrepo 2022.
8 Staudinger et al. 2016.
9 https://www.brookings.edu/blog/up-front/2014/03/28/why-aging-and-working-makes-us-happy-in-4-charts/
10 Allel et al. (2021) show that, in Mexico, more access to formal education during childhood and adolescence is
associated with a long-term positive effect on health and later retirement.
3
the nature of labor demand is changing globally, affecting demand for mature workers, and will also
impact labor markets in L/MICs, albeit to a varying degree. Aging can itself generate demand for
products and services, thus generating jobs in the so-called “silver economy.”
The paper provides a review of key data and relevant literature on productive longevity. The policy
review summarizes evidence based primarily on search based on policy areas (social security, lifelong
learning, etc.) coupled with keywords including “old*” or “old age”, “senior*”, and “elder*”, and
snowballing from identified studies. The policy agenda focusing on productive longevity is relatively
recent and the evidence on policy effectiveness limited, especially for L/MICs. In identifying relevant
literature, we have given priority to studies based on rigorous experimental approaches, but the
review includes other quantitative and qualitative research, from academic journals as well as gray
literature, including reports and studies from international organizations such as the World Bank or
the OECD. Where evidence for mature workers in L/MICS is scarce, we focus on the impact of relevant
interventions for other groups that face similar constraints (e.g. youth, or women), or for HICs. The
paper does not use a precise age cut-off to identify mature workers. Typically, the interventions we
look at would be relevant for age group 55+ and above, but may differ depending on the age group
involved.
The remainder of the paper is organized as follows: Section 2 describes the labor policy agenda for
aging, highlighting the commonalities and diversity of policy needs and options between HICs and
L/MICs as well as within L/MICs. Section 3 presents some stylized facts regarding the nature of work
for older adults. Section 4 presents a conceptual framework around the main constraints to longer
productive working lives. Based on this framework, section 5 looks at the available evidence on what
works, drawing where possible on evidence from LICs and MICs. The final section concludes with some
meta-lessons and points to the important research agenda that lies ahead.
2. A global policy agenda for aging
Aging is a global phenomenon, and all countries will need to consider how to optimize policy to
address the impact of older populations. Old-age dependency ratios are already high in many L/MICs
(particularly in East Asia and Eastern and Central Europe) and increasing rapidly in others (Latin
America and the Middle East and North Africa). The share of persons above 65 years of age reaches
18 percent both in rich East Asian countries and in the OECD but is below 5 percent in Sub-Saharan
Africa, the Middle East and North Africa, and South Asia. (Figure 1). In most of Latin America and
Eastern Europe and Central Asia, fertility rates have already dropped below replacement levels, which
means that the population will also be shrinking. Whereas most countries in South Asia and Sub-
Saharan Africa still have relatively young populations, old-age populations are increasing rapidly in
absolute numbers, and many Southeast Asian countries have already undergone a significant
demographic transition in a very short period. Based on current trends, fertility rates will be below
replacement levels in almost all Asian countries within 20 years.11 Many of these countries risk
experiencing a slowdown in growth and thus “getting old before getting rich.” As the demographic
window of opportunity is closing, sustaining welfare levels will require significant reforms, also in
countries where social protection and skills-development systems are still developing.
11 https://www.csis.org/analysis/will-many-developing-countries-get-old-they-get-rich
4
Globally, women’s life expectancy at birth exceeds that of men by nearly five years, and the gap
persists into older ages. The gender longevity gap is highest in Latin America, Europe, and Eastern and
South-Eastern Asia. This gender gap suggests that productive aging policies need to pay specific
attention to skills and labor market constraints for women, and health constraints for men.
Figure 1: Demographic changes differ across regions, but aging is coming everywhere
Share of 65+ in the population across % change in population 65+, 2019-2050
regions, 2020 250
20
% of population aged 65+
18 200
16
150
% change in pop 65+
14
12
100
10
8 50
6
4 0
Sub-Saharan
Southern Asia
Latin America and
Oceania
Northern Africa and
Europe and Northern
South-Eastern Asia
2
Central and
the Caribbean
Western Asia
Africa
Eastern and
0
America
South Asia
Sub-Saharan
OECD members
East Asia &
High income
Central Asia
Low income
Middle East &
Middle income
North Africa
Europe &
Pacific
Africa
Source: World Development Indicators (left), UN 2019 (right).
The priorities and space for reforms will differ between less and more advanced economies,
reflecting different contexts of aging and productive work. Most analysis and evidence on aging
societies and the relationship with longer working lives is based on HICs. Much can be learned from
these experiences, but there are important differences between less and more advanced economies
that affect priorities as well as the available and desirable set of policy instruments that can support
longer and more productive working lives. These include, inter alia, labor market structure, access to
social protection, human capital levels across generations, norms, and the technical capacity and
political space for reform. Nevertheless, countries that are now building up their education, labor, and
social protection systems can also learn not to repeat errors made by more advanced economies. The
experience from HICs and some MICs shows that the cost of putting in place inadequate solutions can
be substantial. Unsustainable pension systems or insufficient attention to skills development for older
generations have long-term repercussions that can be very difficult (politically and technically) to
undo. Poorer countries need to avoid costly mistakes, such as entrenching costly future pension
payment contingencies in social protection design, or ignoring human capital investments, the effects
of which will manifest themselves in the decades to come.
The dual labor market structure of most L/MICs presents a particular dilemma for policy makers.
The International Labor Organization (ILO) estimates that, on average, about 70 percent of the
employed workforce is informally employed in developing countries.12 On the one hand, high
informality and low-productivity work mean that policies focusing on formal workers and formal firms
will be less effective in changing aggregate outcomes, despite promising evidence in some areas that
policy can affect old-age productivity and employment decisions. On the other hand, many workers in
12 Based on statistics for 61 developing countries, from Elgin et al. 2021.
5
the informal sector—given the lack of access to social protection and overall low levels of private
savings—arguably already work too late in life, caught in a vicious circle of ill-health and low
productivity and straining work, leading to even worse physical and mental health.
Increasing the productivity of low-productivity mature workers in L/MICs would likely be difficult,
given health and education gaps and lower life expectancy. As access to education and health has
expanded over the past decades, inter-generational gaps in education and health are also significant.
In a country like Vietnam, which has undergone a remarkable upskilling effort in past decades, over
60 percent of those over age 60 have only completed primary education, whereas the vast majority
of young people have at least higher secondary education.13 In many L/MICs, human capital levels in
the younger generations, while increasing, remain insufficient and need to increase substantially,
however, raising the urgency of investing in children and youth who make up the future workforce.
Despite these caveats, there are strong reasons to form productive longevity policies for workers
who have higher human capital levels and resources to retire. This group always exists: in many LICs,
likely represented by public sector workers; in MICs, a larger share is likely to come from the formal
private sector. For this group, the policy agenda could more closely follow that of advanced economies
and focus on extending working lives. Although early investment is critical, fostering skills
development throughout working lives may be more efficient than has previously been considered,
not least because a person over her lifetime generally spends much more time at work than in school.
Research shows that returns to work experience may explain as much of the income gap between
HICs and L/MICs as gaps in education: workers in L/MICs develop less human capital on the job than
do workers in HICs.14 In addition, the hiring rate of mature workers may in fact be higher in L/MICs
than in HICs.15 This higher dynamism suggests significant pay-offs to investing in human capital and
adequate employment transition.
L/MICs hence face a more comprehensive policy agenda than HICs, with both opportunities and
risks. A significant part of the challenge of productive aging in L/MICs is clearly about investing in
children and youth and increasing productivity and boosting social protection and health support
among older workers, often in informal, low-productivity employment. But there are also
opportunities for developing policies addressed to mature workers. In this paper, we discuss the
evidence for measures that aim to extend working lives though policy instruments that apply mostly
to formal work as well as for measures that can support more productive employment in both the
formal and informal sectors. In doing so, we recognize that the profile and context for mature workers
today are different from those of the past and certainly likely to differ from those of tomorrow. The
policy evidence reported should be considered in this light.
3. Work in old age – Some stylized facts
This section presents some stylized facts regarding the nature of work among mature workers, looking
at participation patterns and trends and the development of human capital - in the form of access to
13 World Bank 2021a.
14 Jedwab et al. 2021.
15 Annex Table 1 shows that in several middle-income countries (Brazil, Colombia), the hiring rate of 55-64 year
olds is much higher (34 and 24 percent respectively) than in EU27 or OECD countries (6 and 8 percent).
6
good health and the means to adapt to a labor market with rapidly changing skills needs – elements
that determine the ability to work into old age and influence worker productivity.16
The nature of work among older adults
Old-age labor force participation is generally lower, the higher a country’s average income level. In
the average LIC, more than half of the 65+ population is active in the labor market (Figure 2). Moving
up through country income groups, participation rates fall systematically. In lower middle-income
countries (LMICs), 33 percent of the 65+ population is active, and in upper middle-income countries
(UMICs) and HICs, this rate falls to 19 and 13 percent, respectively. Across income groups, European
countries are outliers, with significantly lower participation rates than other regions. High labor force
participation in poor countries largely reflects a need to work. In Thailand, for example, 31 percent of
people above age 60 report that labor income is their main source of income, which is much higher
than the share reporting pensions (5 percent) or elderly allowance (17 percent).17
Figure 2: Labor force participation for older workers falls with a country’s income
labor force participation rate (%), age 65+, by
country income group
60
50
40
30
20
10
0
LICs LMICs UMICs HICs LMIC UMIC HIC
All regions Europe only
Source: Estimates based on Staudinger et al. 2016. Refers to 2013 data.
The pattern of participation over the life cycle is similar across country income levels, despite very
different levels of participation. Figure 3 presents three cases as an illustration: low-income Liberia,
middle-income Morocco, and the high-income Republic of Korea. Across these very different
countries, labor force participation falls after age 55, for both women and men. In Morocco, where
female labor force participation is very low, the pattern for male participation is nonetheless similar
to that of both richer and poorer countries, and even among women, there is an inverse u-shape
16 A complete assessment of labor market conditions for mature workers is outside of the scope of this paper.
However, several World Bank country-level or regional studies provide more comprehensive overviews of labor
market conditions for older workers including sector and occupations analysis, for example for Thailand (World
Bank 2021b), Vietnam (World Bank 2021a), East Asia and the Pacific (World Bank 2016), Malaysia (World Bank
2020), and the Russian Federation (Levin 2015).
17 World Bank 2021b.
7
between participation and age. Globally, patterns of age-related change in the balance between paid
work, unpaid work (including care for others), personal care (for oneself), and leisure is surprisingly
consistent across countries.18
Figure 3: Labor force participation patterns are similar over the life cycle across richer and poorer
countries
Source: Estimates based on ILO data. Refers to 2019 data.
Gender-gaps among mature workers appear more important in MICs than in HICs. Based on a
comparison of a set of middle-income countries with the European Union (EU) and OECD, mature
workers in the developing world (i) have higher gender employment gaps and (ii) exit the labor force
later, but (iii) with earlier exit for women relative to men (Annex 1). The gender gap in labor force
participation rates for workers aged 65+ is below 10 percentage points in Canada, Germany, and the
United Kingdom, but above 30 for Chile, Malaysia, Mexico, and Türkiye.19 For LICs, the gender gaps
are not likely to be quite as dramatic. The poorer the country, the higher the chances that women also
must work as they age.
Lacking social protection, many mature workers in L/MICs continue working to secure their
livelihoods. Data on social insurance in LICs are scarce, but what is available suggests that only a few
percent of the population are covered. In MICs, rates of coverage are in double digits but rarely exceed
30 percent (Figure 4). In some countries, particularly in rapidly transforming economies such as
Vietnam, informality is significantly more prevalent among mature workers than among younger
adults.20 Even for those covered, adequacy of pension benefits is often low, raising incentives to
continue to work informally. Consider Georgia, where the universal pension amounts to 17 percent of
the average wage and is projected to fall to as little as 6 percent by 2050.21 In a study of mature
workers in Argentina, 70 percent of persons receiving a benefit and working reported doing so
because their pensions were insufficient to cover needs.22 In Malaysia, 40 percent of the population
are not covered by pensions, and among those covered, many continue to work in old age as their
contribution history is insufficient to ensure adequate pensions.23 In a set of Latin American countries,
18 percent of those who receive a pension still work, and their working hours approach full-time and
18 Ferranna et al. 2022.
19 World Bank 2020.
20 Lam and Elsayed 2021.
21 World Bank 2022a.
22 Barrientos 2011.
23 World Bank 2020.
8
are only marginally lower than those of persons who do not receive a pension.24 In a global study
involving consultations with older persons in L/MICs, one-third of participants reported working for
pay. What is more, twice as many were willing to work for pay if given the opportunity.25
Better-off workers are also considering continuing working later in life, whether to top up
retirement income or for other benefits, such as social connections. According to a 2012
Eurobarometer Survey focused on Active Aging, one-third of Europeans would like to continue
working after retirement age and two-thirds would welcome opportunities for partial retirement.26
Labor supply elasticities seem to increase significantly over the lifecycle (based on data from the
United States),27 showing that incentives can matter greatly for participation.
Figure 4: In MICs, pension coverage remains low
Source: Rutkowski 2018, reproduced in World Bank 2022b. Note: The figure shows participation rates in
contributory pension schemes from the 1990s to the 2010s. The dashed horizontal line represents no change
in rates of contribution over time.
Old-age labor force participation and education interact differently across countries. For HICs, levels
of education are a strong determinant for labor force participation at older ages, likely reflecting that
education gives access to fulfilling work opportunities and is not associated with physically straining
labor.28 In poorer countries, however, more highly educated persons are more likely to have access to
pensions and/or accumulated private savings that make retirement possible, whereas less-educated
persons are more likely to be obliged to work in older age.
Globally, self-employment is more common among older workers than other age groups. Across
countries, the 55-64 age group often has the highest rate of self-employment in the working age
population (15-64). Compared to EU and OECD countries, mature workers in MICs are more likely to
be self-employed.29 In East and Southeast Asian countries, self-employment rates are nearing 90
percent for older rural men and women; even in urban areas, the share of the self-employed increases
24 Eclac/ILO 2018.
25 UNFPA 2012.
26 European Commission 2012.
27 French and Jones 2012.
28 Boissonneault et al. 2020.
29 See table, Annex 1.
9
as of age 60, reflecting that the self-employed are more likely to stay in the labor market, whereas
employees, at least from the formal sector, retire.30 In HICs, self-employment can represent
“opportunity” entrepreneurship, a desire to use experience to run a business or lead a more flexible
working life. In the United States, the rate of new entrepreneurs is significantly higher in the age group
55-64 than in the age group 20-34 (0.37 vs 0.23 percent). The share of older adults among new
entrepreneurs also increased from 15 percent in 1996 to 26 percent in 2018, and older adults are
more likely than other age groups to be opportunity driven.31 However, higher rates of self-
employment among older workers in L/MICs often signal “push factors,” such as lack of wage-work
opportunities, with higher informality and overall more precarious employment. In Thailand, for
example, informality rates are below 50 percent for workers aged 35-44, but they are nearly 80
percent for those aged 55-64 and over 90 percent for workers aged 65 or more.32
Earnings generally increase with age, all else equal, but patterns vary and may depend on age cohort
characteristics. A recent global study finds that returns to work experience are significant, at around
2 percent globally, and that education cannot easily substitute for experience. There is significant
variation across countries, however. First, as mentioned above, there are higher returns to experience
for workers in HICs compared to L/MICs. The authors hypothesize that this gap occurs as workers in
HICs are more likely to be able to accumulate human capital over time; however, the higher returns
could also reflect more access to formal and regulated employment with automatic wage increases
that are unrelated to human capital or productivity, or to a higher likelihood of working in firms that
are richer in physical capital which can also boost productivity among complementary factors of
production. Second, in economies transitioning out of state-led economic systems (former communist
economies), skill sets have become obsolete more rapidly than in other countries, and so returns to
experience have been lower for specific older cohorts.33
In advanced economies, the labor market participation of older workers has increased in the past
few decades. In 1996, the average worker in an OECD country could expect to exit the labor force at
approximately 62 years of age; in 2016, the age of exit had increased by two years, to 64.34 Between
2002 and 2017, the participation rate for workers between 55 and 74 years increased by 9 percentage
points across OECD countries, reversing a decline that had taken place since the 1970s.35 These trends
have occurred across OECD countries, across genders, and across socioeconomic groups.
In contrast to trends over the past 20 years, the COVID-19 pandemic has resulted in a significant
withdrawal of older workers from the labor market, however. Data from Australia, Austria, China,
and the United Kingdom show that older workers were worse hit in the labor market than younger
workers by the COVID-19 pandemic, both in terms of quality of work, and in loss of work.36 In the
United Kingdom and the United States, the largest cuts in total employment were due to older workers
(55 and over) who dropped out of the labor market during the height of the pandemic. Many of these
workers have not (yet) returned to work and may never do so - once out of the labor force, older
30 World Bank 2016.
31 Farlie et al. 2019.
32 World Bank 2021b.
33 Jedwab et al. 2021. Chernina and Gimpelson (2022) show, for the Russian Federation, that when time, cohort
and experience effects are separated, the cohort and experience factors work in opposite directions, reflecting
the massive depreciation of skills.
34 Boissonneault et al. 2020.
35 Geppert et al. 2019.
36 Pit et al. 2021.
10
workers are more likely to remain inactive than their younger counterparts.37 A study of interstate
informal sector migrant workers in India showed a strong and positive correlation between age and
income losses during the COVID-19 pandemic.38 These outcomes stand in contrast to the Global
Financial Crisis, which did not result in a sustained reduction in older workers’ participation in labor
markets.39
The changing nature of work may be contributing to more age-friendly jobs. Technology is enabling
automation of many tasks, but also raises demand for skills that are (still) complementary to
technology, such as creativity, problem solving, and socio-emotional competencies.40 Globally, fast-
aging countries are seeing higher rates of automation, driven by skills gaps related to specific cohorts
(manual production skills).41 At the same time, in the United States, in parallel to the automation
process, jobs have become more “age-friendly”: less physically demanding, more flexible, or involving
autonomous and team work, for example. These jobs are not necessarily taken by mature workers,
however, although they are more adapted to their needs and preferences.42
Human capital and productive longevity
Health and skills – human capital – are central to productive longevity. The increase in labor force
participation observed in OECD countries in the past decades can largely be attributed to higher life
expectancy and educational attainment, whereas changes to statutory retirement age accounted for
less than 10 percent of changes.43
Before the COVID-19 pandemic, healthy life expectancy had been increasing globally, prolonging
the physical and mental ability to work. A strong relationship can be found between health and work
in old age.44 In the past two decades, healthy life expectancy (HALE)45 has increased by 5.4 years, from
58.3 in 2000 to 63.7 in 2019 (Figure 5). Healthy additional life years have increased across all country
income groups, although there are still gaps between advanced and developing countries. By 2015, a
woman aged 60 living in an UMIC, could expect to live nearly 17 additional years in good health, all
else equal, an increase by 21 months compared to 2000. LMICs and LICs have also seen increases in
HALE, albeit somewhat smaller, and women aged 60 can now expect to live in good health for another
14 years. There are significant gender gaps, however: men can expect two fewer years of healthy life
than women in HICs and UMICs. These statistics point to a gendered work, life, and health challenge:
whereas women are more likely to live longer than men, especially in HICs and MICs, they are less
likely to participate in work, especially in MICs.
37 Pizzinelli and Shibata 2022.
38 Guha et al. 2020.
39 OECD 2013.
40 World Bank 2019.
41 Acemoglu and Restrepo 2022.
42 Acemoglu et al. 2022.
43 Geppert et al. 2019.
44 E.g. Giles et al. 2012.
45HALE is the average number of years that a person can expect to live in "full health" by taking into account
years lived in less than full health due to disease and/or injury. https://www.who.int/data/gho/indicator-
metadata-registry/imr-details/66
11
Figure 5: Healthy life expectancy has been increasing across the globe
Healthy life expectancy at age 60
20.0
19.0
16.8 16.7
15.0 14.5 13.8 13.4
12.8 12.0
Years
10.0
5.0
0.0
Male Female Male Female Male Female Male Female
HIC UMIC LMIC LIC
2000 Addition 2000-2015 2015
Source: Estimates based on WHO statistics.
Working longer can in fact create a virtuous circle of health and work at older age, but the outcome
likely depends on the nature of work and employment conditions. Age-related physical and
psychological changes can be moderated with physical and intellectual activity and other lifestyle
factors.46 Work can bring cognitive stimulation and social interaction, which contribute to continued
mental and physical agility. Social interactions at work, which are likely to demand constant
adaptation, have been shown to be particularly important to maintain brain capacity.47 However,
prolonging work in (predominantly low-skill) jobs that provide limited stimulation, jobs that cause
undue stress, and jobs that are physically straining with high risk of occupational disorders, is bad for
healthy longevity.48 The overall employment situation also matters, as job insecurity in old age can in
fact lead to deteriorating mental health.49
Beyond health, skills investments are also critical as demographic patterns shift, since the nature of
jobs is also changing, raising the importance of continuous skills development . Across the globe,
there is substantial evidence that jobs are becoming more intense in cognitive, analytical tasks.
Technological change is resulting in higher demand for technology-complementary skills, both higher-
order cognitive skills as well as socio-emotional skills.50 Accessing productive work, hence, increasingly
requires a more complex set of skills and adaptive capacity. Evidence from the EU shows that the
productivity decline often observed among older workers is more likely due to skills obsolescence than
to age itself; in Mexico, wages of college-educated workers have fallen due to a fall in wages of mature
rather than young workers, pointing to a similar potential effect.51
The aging process need not prevent older people from working productively and learning new
things; depending on the task, aging may even be helpful. Aging inevitably involves some cognitive
decline. However, both the timing and extent of decline vary significantly across individuals, and the
46 Crawford et al. 2009.
47 Staudinger et al. 2016.
48 Staudinger et al. 2016, Prinz et al. 2018.
49 Gutierrez and Michaud 2019.
50 World Bank 2019.
51 Mayhew and Rijkers 2004.
12
overall rate of decline can, as mentioned, be moderated. Moreover, not all cognitive abilities
necessarily decline during aging, at least not before 80 years of age, and some even improve at older
ages. For example, the ability to receive information declines relatively early, but the capacity to direct
information and act on the information (orienting and executive functions) can in fact increase, well
into the 70s. Whereas some skills such as verbal memory and perceptual speed peak relatively early
in adulthood, other skills such as verbal ability or auditory comprehension, which draw on orienting
and executive functions, peak much later, often after 50 years of age. As a result, the aging brain may
in fact retain a high degree of functionality.52
The ability to develop new skills is critical to retaining productivity, however. Whereas improved
health is increasing the potential years of work, the shelf-life of skills is falling.53 The evidence on
capacity to learn at older age suggests that older adults’ learning process is different from that among
younger people, but not necessarily less efficient.54 In fact, workers can continue to contribute
significantly to workplace productivity at older ages, drawing on experience and capacity for
judgement. Whereas they may be somewhat slower to complete some tasks, they compensate for
lack of speed by executing them better.55
Mature workers may also have stronger socio-emotional skills that are in increasing demand.
Contrary to common perceptions, mature workers score higher than younger colleagues on broad
concepts of job performance, including on reducing counterproductive work behaviors, workplace
aggression, and tardiness, all of which are important factors affecting overall productivity. Moreover,
mature workers are not necessarily less innovative in the workplace than younger workers.56 A meta-
study found that mature workers generally function equally well or even slightly better than young
workers on emotional competencies, which are specifically important for the growing services sector
(and arguably for the broader economy, as well).57 A study of German workers in the services sector
showed that older workers were more engaged with their work, more confident in their abilities to do
the job, and less prone to burnout than younger employees.58
4. What holds back productive longevity?
What can be done to promote longer and more productive working lives? Several factors can
constrain mature workers’ participation in the labor market and their productivity at work. This
section presents a framework highlighting constraints that can affect mature workers’ incentives and
ability to work and do so productively, employers’ incentives to hire or retain them and invest in their
human capital, and matching between demand and supply (Figure 6). Throughout the remainder of
the report, we try to identify L/MIC dimensions where possible.
Institutional, market, and behavioral failures create constraints for mature workers and the firms
that may employ them. Institutions and policy and regulatory frameworks affect incentives and
opportunities for workers to engage, and for firms to hire them. Examples include labor regulations
52 Veríssimo et al. 2022, Desjardins and Warnke 2012.
53https://www.weforum.org/agenda/2017/07/skill-reskill-prepare-for-future-of-work/
54 Picchio 2021; Thomas et al. 2020.
55 Backes-Gellner et al. 2011.
56 Ng and Feldman 2008.
57 Doerwald et al. 2016.
58 Johnson et al. 2017.
13
and social protection, including pensions. Market failures include missed-out externalities from more
skills development or better public services (including care services), imperfect information about
workers’ ability, or the public-good nature of some investments in health or education. Finally,
behavioral constraints include social norms around who works, or internalized ageism – prejudice or
discrimination on the grounds of a person's age.
Figure 6: A policy framework for longer and more productive working lives
Source: Authors.
Supply-side constraints – Incentives and ability to work productively
To extend working lives with productive employment, workers need to (i) have the incentives to
work, with institutions and regulatory frameworks that allow for it and do not discourage it,
including in ways that accommodate changing preferences; and (ii) the skills and health necessary
to be employable, particularly in the context of a rapidly changing world of work. We discuss these
two areas in turn.
Labor regulations, tax systems, and social welfare systems can significantly influence or outright
dictate opportunities for work beyond retirement, with both positive and negative effects .
Mandatory retirement ages, legal impediments to partial retirement, or unfavorable regulations for
part-time work or flexible work arrangements or pay may outright prohibit or make it less attractive
for workers to continue. China’s retirement rules still oblige men to retire at 60 and women at 55, or
50 for specific, physically more burdensome jobs.59 Almost half of the world’s countries, the vast
majority L/MICs, have limits on the use of fixed-term contracts.60 On the other hand, employment
protection legislation favoring tenure may allow workers to stay on the job and retain their wages.
59 OECD 2019a.
60Data from World Bank Employing Workers Database. The median limit is three years (36 months) for
cumulative contracts.
14
Taxation of earned income in addition to pensions and second-earner taxation tend to rapidly increase
the implicit tax rate on work with age.61 Taxation appears particularly important for groups with higher
inactivity rates (and thus a larger labor supply reserve), including women and low-skilled workers, and
for populations with highly elastic labor supply, which includes many older workers. 62
Social welfare systems, including the level and structure of pension benefits as well as
unemployment or disability pensions, can further affect incentives to work. In many countries,
formal sector workers enjoy relatively generous early retirement rules, creating incentives to retire
early.63 In East Asia and Pacific countries, retirement ages in national pension schemes are relatively
low compared with life expectancy at age of retirement.64 The design of other social welfare programs
also matters. If mature workers are eligible for prolonged unemployment benefits, or if the
requirements for job search in unemployment or disability-benefit programs are waived for them, are
too lax, or are weakly enforced, alternative pathways to leaving the labor force without jeopardizing
retirement benefits open.65 Such loopholes can hence reduce the impact of pension reforms aimed at
increasing retirement ages.66
Pension income, whether through contributory or noncontributory systems, can be an important
factor in determining workers’ participation choices in middle-income countries. Analysis of the
impact of the early retirement age in Central Europe and the Western Balkans shows that pension
receipts are significantly and negatively associated with labor force participation.67 In Argentina,
widening the eligibility for noncontributory pensions lowered labor force participation rates by 5
percentage points and increased informal work.68 The South African social pension program has been
shown to reduce employment among the elderly.69 These experiences appear consistent with
historical evidence from more advanced economies. The introduction of a social pension from age 70
in the United Kingdom, some 100 years ago, lowered labor force participation rates by 6 percent, even
with a very low adequacy of benefits.70 As systems expand, it is important to make sure that programs
remain incentive-compatible.
Information gaps due to limited financial literacy can also impact retirement choices for those
covered by pension systems. Understanding the expected level of benefits and how that will impact
welfare in older age is a prerequisite for making rational labor market decisions. Surveys in Sweden
and Ireland show that knowledge of future pension benefits is at best limited, and that the most
economically vulnerable groups know the least about their future benefits.71
In addition to rethinking pension systems, flexible work arrangements may be needed to
accommodate work preferences that change with age. There is evidence that mature workers need
61 Butrica et al. 2006.
62 Meghir and Phillips 2010.
63 Bussolo et al. 2015, World Bank 2016.
64 World Bank 2016.
65 Ahlqvist and Boren 2017 and Kyyrä and Ollikainen 2008.
66 Pension reform during recession in Germany resulted in alternative pathways pushed by employers -
unemployment and partial retirement (Lorenz et al. 2020).
67 Bussolo et al. 2015, Gragnolati et al. 2011.
68 Bosch and Guajardo 2012.
69 Baird et al. 2018. The paper shows that cash transfers in general do not lower aggregate labor force
participation, however.
70 Gisecke and Jäger 2021.
71 Elinder et al. 2020, Barrett et al. 2015.
15
and value flexible work arrangements, including both those related to flexible time schedules and
changes in work roles and assigned tasks, and that providing such arrangements serves to delay
retirement.72 Particularly in HICs but also in some middle-income countries, COVID-19 has given rise
to structural changes in the organization of work, with a rapid move towards more home-based and
flexible solutions for many white-collar jobs, as well as a shift to independent work, that over the long
run may benefit working conditions for mature workers.73
Family and the availability of care services also matter for labor market participation, especially for
women. Grandmothers all over the world hold a central responsibility for the care of their
grandchildren, and hence support the labor market participation of the parents of these children.
Towards the end of working life, many are also caring for elderly parents or even their spouse. In
Europe, one-third of grandparents provide regular care and women who do are also less likely to be
working.74 Care obligations are even more prevalent in L/MICs, where three in four elderly people live
in the same household with members of younger cohorts, compared to one in four in HICs, and where
formal care services are often lacking in supply and quality.75 A study of time use allocation in a set of
OECD countries, China, and India, showed that the time share allocated to paid work fell successively
as of age 45-50 across the sample, whereas unpaid work was highest when people were in the their
late 30s (likely related to child bearing and rearing), and again increased after age 60.76 In countries
with significant outmigration, whether international or intranational, grandparents may be the main
caregivers in so-called “skipped-generation” households consisting of only older people and
children.77 Studies from Brazil, Mexico, and Thailand show that grandmothers’ care obligations affect
both their participation and hours worked negatively.78 Since families are often formed relatively early
in life, many of these grandmothers in L/MICs often have significant potential working years ahead
when they leave the workforce, reduce hours, or move to less-demanding activities. Spouse
employment is also generally positively correlated: to retire is a joint decision, made with a view to
spending time together.79 A study from the Russian Federation showed that having a working wife is
associated with a 13 percentage point increase in the probability that a pension-age husband will still
be employed.80 In urban China, a working spouse is associated with as much as 40 percent and 58
percent increases in the probability of men and women working, respectively.81
Lack of safe and reliable transportation systems affects mature workers’ access to productive
opportunities. More care responsibilities, lower stamina and physical strength, and related
vulnerability to crime means that mature workers depend heavily on quality transportation services.
A survey of senior workers in the United States suggested that lack of reliable transportation was a
72 Atkinson and Sandiford 2016.
73 McKinsey Global Institute 2021.
74 Backhaus and Barslund 2021.
75 UN 2007.
76 Ferranna et al. 2022.
77 UNFPA 2012.
78 Attanasio et al 2022, Paweenawat and Liao 2021. A study from Mexico also showed that female labor
participation of a mother was not negatively correlated with more children, but that co-habitation with
grandmothers increased in response to more children (Schmieder 2021).
79 Giles et al. 2012.
80 Levin 2015.
81 World Bank 2016.
16
somewhat serious or very serious obstacle to working for 82 percent of respondents.82 Research on
the impact of safe, affordable, reliable, and effective transport systems for elderly is lacking. However,
limited access to safe transportation is estimated to be a major constraint for women’s participation
in labor markets, reducing their participation probability by 17 percent.83 Underdeveloped transport
systems in L/MICs are likely to similarly reduce access to work for the older population.
Psychosocial factors may generate additional disincentives for work. If individuals internalize social
norms and stereotypes around age versus capabilities, responsibilities, and work, their incentives and
even capacity to work may be reduced. Individuals who self-identify as being older risk considering
that they are too old for certain jobs, for changing jobs, for promotion, or for developing their skills
further, and that they should not crowd out the younger generation.84 There is evidence, for example,
that “health pessimistic” individuals prefer exiting the labor force earlier than others, even when
actual health levels are not different from other workers. Unsurprisingly, those with higher education
and income appear to have more positive self-perceptions of aging than people with lower incomes
and education.85 Gender and social class also influence own perceptions of optimal exit age. 86
Beyond issues of regulations, incentives, and other barriers, mature workers often underinvest in
skills development in ways that hamper their labor market prospects and lower the opportunity
cost of retiring. Although skills upgrading is essential to remaining relevant in labor markets,
participation in adult learning is low overall, especially for mature workers and in L/MICs. Figure 7
shows, for EU member countries as well as five European MICs, that (i) training is lower in the
European MICs than in the EU HICs, but (ii) the incidence of training monotonically falls with age across
all countries. Low incidence of training is partly due to underdeveloped labor market and career
guidance information systems and services and limited and fragmented markets for training (including
for firm-provided training, discussed below). However, even where subsidized adult training programs
are provided, take-up is often low,87 and there is some evidence that the mature workers who would
be most in need of upskilling – those with lower levels of education and lower wages – may also be
the least interested in or able to participate in training.88 Workers may lack information on the value
of training, what skills to acquire, or what training opportunities are available. Retraining at older ages
may also seem more challenging, discouraging take-up. Workers may choose to not invest in training
if they will not receive fair remuneration for their higher productivity.89 Lack of training is arguably
particularly problematic in L/MICs, where human capital among workers is lower overall and
intergenerational human capital gaps are high. Since skills development is often cumulative and skills
demand can change quickly, the skills gap is likely to compound over time.
82 NCST 2011.
83 ILO 2017.
84 Vickerstaff and Van der Horst 2021.
85 WHO 2021.
86 van der Horst 2019.
87 World Bank 2019.
88 Generation 21 2021.
89 Almeida et al. 2012.
17
Figure 7: Participation in formal or non-formal training, by age
60
Participation in formal or non-formal training in the past 12 months
(% of adults), by age
50
40
EU 27
30
20
10 Serbia
Turkey
N Macedonia
Albania
0 Bosnia-Herzegovina
25-34 35-44 45-54 55-64
Source: Estimates based on Eurostat data. Refers to 2016 data.
Poor health is also reducing both participation and productivity among mature workers. Good health
is a critical asset for productive work and a central component of human capital. Healthy older people
are more likely to participate in the labor market, although again, in poorer countries, those in poor
health may still be obliged to work to the extent they can. Health is not the focus of this paper and is
not reviewed in detail here. It is worth noting, however, that health interventions may be included
among low-hanging fruit for addressing productivity constraints in low- and middle-income settings.
One area is nutritional deficiencies occurring as seniors need fewer calories but more nutrient-rich
meals with age; other areas are broader lifestyle choices that influence later development of non-
communicable diseases (NCDs). The compression of morbidity and the extension of good health into
later years permits longer returns to continuous investment in education.
Demand-side constraints – Incentives and ability to hire and invest in mature workers
This section looks at employers’ incentives to retain or hire mature workers and adapt working
situations to increase their productivity. Factors that constrain relevant opportunities include informal
and formal institutions governing employment and wages, market failures that restrict the quantity
and quality of training, and psychosocial and normative barriers to employers’ recognizing the
potential of older workers.
Regulations and informal institutions around wage setting may raise labor costs for mature workers
above productivity and hence lower their attractiveness to employers. There is significant evidence
that job tenure or seniority leads to higher wages in ways that may be disconnected from productivity
increases. In OECD countries, 10 additional years spent in a job with the same employer increase
wages by nearly 6 percent on average, all else equal.90 Wages appear to rise even more sharply with
tenure in at least some L/MICs, compared to HICs.91 A study of seniority wage setting and firm-level
90 OECD 2019b.
91 Donovan et al. 2020.
18
productivity among Brazilian firms showed that wages were in fact unrelated to productivity; a study
in the Netherlands found a similar disconnect between wage levels and performance.92 In many East
Asian countries, the seniority wage-setting practice is strong, and performance-based pay practices
are not implemented.93 Wages that rise above productivity levels risk lowering the competitiveness
of mature workers. Analysis of firm-level data in East Asian countries shows that seniority wage
practices indeed are strongly and negatively correlated with hiring workers in the age group 50-64.94
Formal regulations also matter for labor costs and may shift these above mature workers’
productivity levels. First, social contributions increase with wages. This can contribute significantly to
raising labor costs, as in some countries social insurance contributions are very high – e.g., 45 and 36
percent of wages in Argentina and Brazil, respectively.95 Especially in the presence of asymmetric
information, the cost of hiring older workers may therefore be higher.96 If productivity does not
increase in parallel with social contributions, unit labor costs for mature workers increase. A survey of
UK employers suggested that pension costs were the main deterrent to hiring mature workers – more
important than the limited time frame for return on investments in skills, or any perceived lack of
skills.97 Similarly, employment protection legislation (EPL) can increase the costs of labor adjustments,
as many regulations imply higher costs with longer job tenure. Globally, the average number of weeks’
pay required as severance in the case of dismissal increases from three for workers with one year of
tenure, to 21 for workers with 10 years of tenure. In Indonesia, a worker with 10 years of service
receives an average severance payment equal to 22 months of wages.98 Strict EPL may be one of the
reasons for not hiring mature workers.99
“Ageism” and social norms, including those reinforcing age stereotypes, also make the hiring of
older workers more difficult. The assumptions that mature workers are frail, stubborn, less capable
of learning, and technologically challenged can result in age-stereotyped hiring practices and
workforce management practices that reduce the productivity of mature workers—for example, if
mature workers feel insecure about their jobs and thus invest less in skills.100 There is significant
evidence of biased perceptions and management practices with respect to older workers within firms.
A survey by Generation 21 across Brazil, India, Italy, Singapore, Spain, the United Kingdom, and the
United States showed that 38 percent of managers considered mature workers unwilling to take up
new technology, 27 percent considered them unable to learn new skills, and 21 percent answered
that mature workers did not work well with other generations. Yet, when hiring workers, the same
managers valued experience above all.101 In countries lacking age discrimination legislation, practices
such as defining upper age limits for job vacancies – and to some extent mandatory retirement ages
92 Rocha 2017, Dohmen 2003.
93 World Bank 2016.
94 At the same time, seniority wages may have other underlying rationales, as firms may purposely set wages
below productivity levels for younger workers and above productivity levels for older workers, to foster firm
fidelity (Zwick 2009).
95 https://iuslaboris.com/insights/comparing-social-security-contributions-rates-across-latin-america/
96 OECD 2019b.
97 Auer and Fortenu 2000.
98 Estimates based on Employing Workers Database, https://www.worldbank.org/en/research/employing-
workers
99 Bussolo et al. 2015.
100 Jin and Baumgartner 2019.
101 Generation 2021.
19
– outright discriminate against mature workers.102 A survey in EU countries found that a majority of
respondents thought that being over 55 years of age put job applicants at a disadvantage.103 An
experimental study in Sweden showed significant and independent negative correlation between
being older and the chances of being called for an interview, and callback rates began to decline for
workers already in their early 40s.104 A similar approach for the United States provided robust
evidence of age discrimination against older women, but not against older men.105 In Deloitte’s 2018
Global Human Capital Trends report, 20 percent of business leaders viewed older workers as a
competitive disadvantage, and in countries such as the Netherlands, Russia, and Singapore, this
percentage was far higher; some 15 percent also felt the older employees to be blocking rising (young)
talent.106
Firms—particularly small and microenterprises— generally invest little in skills development for
their workforces, despite the importance of skills for firm productivity. Individuals’ low investment
in their skills development is thus mirrored in underinvestment by employers. The World Bank’s
enterprise surveys show that only one-third of firms offer training to their workforce, and those that
do, invest in a minority of their workers (Figure 8a and b). Across country income groups, small and
micro-firms are the least likely to offer training, and firms in L/MICs are less likely to offer training
compared to firms in HICs, for each size class of firms.
Figure 8: Access to training through employers is limited, especially in L/MICs
a. Average share of firms providing training and b. Average share of firms providing training, by
share of workers receiving training (in firms where firm size and income group
offered), by income group
60 80
70
% firms providing training
50 70
42 41 43 60
40 35 60 51
34
50 44 43
25
% firms, % of workers
30 37
40 34
20 27
30
20
10 20
0 10
LIC MIC HIC 0
LIC MIC HIC
% firms providing training to workers
% workers receciving training Small Medium Large
Source: Estimates based on World Bank Enterprise Surveys.
Several market failures may help explain firms’ underinvestment in skills beyond formal
education.107 Firms may underinvest because training to some extent is a public good, and they risk
102 OECD 2019b.
103 European Commission 2015.
104 Carlsson and Eriksson 2019.
105 Neumark et al. 2015.
106 Deloitte 2018.
107 See the framework presented in Almeida et al. 2012.
20
losing the returns to investment if other firms “poach” the skilled workers, and more generally due to
high worker turnover. Managers may lack accurate information about what skills will be needed, the
value of training for productivity, earnings, and employability, or what training opportunities are
available.108 Financial institutions that likewise lack understanding about training and the impact on
productivity can restrict credit for training purposes. Coordination failures arise when firms cannot
find productive workers and therefore cannot increase pay, whereas workers underinvest in skills
because they will not be rewarded, and the training offer remains underdeveloped. In principle, the
time horizon for reaping the benefits of skills investments by firms is shorter for mature workers,
which may also create disincentives to invest in their skills.
Firms may also underinvest in other complementary strategies that are valuable to increase the
productivity of older workers. Relevant technology tools, more ergonomic working conditions, health
literacy, and other health interventions, as well as organizational changes such as multi-age teams or
flexible working arrangements may be needed. As in the case of skills, firms may lack the knowledge
or resources for such investments.109
Intermediation – Effective matching services for mature workers
Even when mature workers have the necessary skills and health, and firms are prepared to hire them,
the search and matching process between jobs and workers in the labor market may be costly and
lengthy, particularly for older workers.
Public and private employment services may have limited capacity to serve older workers. Public
employment services exist in most developing countries (nearly 80 percent in 2020), and a majority
provide both job placement, counseling, and training services.110 However, official retirement age is
often set as the upper age limit for program eligibility, excluding older workers. Moreover, services
such as job search support or training may be poorly adapted to older workers. Caseloads for
employment service case workers often exceed the levels recommended by the ILO (1:100),
suggesting limited capacity to provide tailored services to a group with specific training and other
needs. The increase in e-government services in high- and middle-income countries needs careful
design and outreach efforts to reach mature workers. A study of employment services’ self -service
tools in the United States found that these features were least used by mature workers precisely
because of lower digital skills.111 The risk of exclusion may be even higher in L/MIC settings, given
lower levels of education and skills. Digital gaps are likely to have worsened the impact of COVID-19
on mature workers’ employability as employment support often moved online.
Lack of job and career search skills among mature workers may also be holding back matching
opportunities. Digital skills are increasingly important in identifying and applying for job opportunities
(as well as increasingly important for the job itself). However, globally, digital literacy is lower in the
older generation112 and the gaps are likely to be higher in L/MICs, where age-related gaps in literacy
and education are also higher.
108 Almeida et al. 2012.
109 Söderbacka et al. 2020, EU-OSHA 2016.
110 Estimates based on World Bank Unemployment Protection and Employment Services Database.
111 D’Amico et al. 2009.
112 ITU 2021.
21
5. Productive longevity: What could work in L/MICs?
This section presents evidence for interventions directed at individuals and families (supply side), at
firms (demand side), and at employment services in charge of labor market intermediation. Across
these dimensions, we identify policies that could raise incentives and remove barriers to accessing
work, and those that could foster productivity by raising human capital and especially skills (there is
limited evidence on health). Policies aimed at increasing labor force participation are largely focused
on formal sector workers, for whom regulatory reform is relevant. Formal sector workers are more
likely to have resources (and thus incentives) to retire, but at the same time are more able to continue
working and with higher productivity, than workers in informal, low-productivity jobs. Human capital
policies, by contrast, are also relevant for the informal sector.
In identifying relevant literature, we have given priority to studies that present results for LICs or MICs
and to rigorous evaluations, to the extent possible. However, the policy agenda focusing on productive
longevity is relatively recent and the evidence on policy effectiveness limited, especially for L/MICs.
Where evidence for mature workers in L/MICS is scarce, we focus on the impact of similar
interventions for other groups, or for HICs, and discuss potential differences that would need to be
considered when drawing lessons from these experiences.
Supply-side interventions: Improve incentives and remove barriers to work while
investing in skills development
This section discusses evidence on regulatory reforms to improve work incentives and make work pay
for mature workers, along with improvements in services and skills development aimed at increasing
the ability and capacity of mature workers to work longer and more productively.
Reforming social insurance and labor taxation
Reforms to social insurance focused on increasing retirement age and reducing work disincentives
in the design of pension schemes can play a role in extending working lives for formal sector
workers. Across OECD countries, comprehensive social security reforms of contributions, benefits,
and retirement ages are planned or have already been implemented.113 Raising retirement ages has
resulted in postponed retirement and higher employment rates among mature workers. Raising
retirement ages in Austria and Germany, for example, resulted in increases in employment by nearly
10 percentage points for the affected groups.114 Many middle-income countries in East Asia and the
Pacific, Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North
Africa have also reformed their pension systems. The objective has primarily been to increase financial
sustainability, and labor market impacts have not been systematically studied, however.
Pension reforms require careful attention to the entire social insurance system. As discussed above,
increasing retirement age may also result in a more intensive use of alternative pathways into
inactivity, such as unemployment, disability support, or partial retirement – especially for low-wage
and less healthy workers, and especially during recessions. In the studies of Germany and Austria cited
above, for example, some mature workers transitioned into other forms of social insurance support.
Countries have consequently embarked on a parallel set of reforms to close loopholes, including
113 Boissonneault et al. 2020.
114 Riphahn and Schrader 2021 and Staubli and Zweimuller 2013.
22
abolishing the right of older unemployed persons to waive job search requirements when accessing
unemployment benefits.115 116
Relaxing partial retirement rules is a commonly proposed reform to retain workers, but when
designing and implementing such policies, it is also important to consider potential negative
impacts. Studies show that flexible working arrangements giving workers choice and control are linked
to better health and wellbeing.117 When surveyed, workers report favoring arrangements that would
allow them to adjust the timing and speed of labor market exit according to their preferences.118
However, partial retirement options in OECD countries do not appear to increase total working hours,
largely because they also afford the opportunity to retire earlier than planned.119 There is also some
evidence that partial retirement regulations can have a negative effect on hiring older workers or be
used as an alternative pathway for retrenchment.120 Partial retirement may be incompatible with job
and task bundling, especially for high-skill jobs, and may raise the cost of mature workers, which in
turn reduces incentives for hiring.121
Pension reforms carry high political costs, pointing to the importance of getting the design right
from the outset. In Europe, several countries have reversed earlier reforms by postponing, limiting,
or outright reversing existing or planned increases in early or normal retirement ages.122 More
generally, the experience of both advanced and developing economies shows that design flaws in
social protection systems can take many years to untangle and may carry very high fiscal and political
costs. Countries seeking to expand social protection systems therefore should incorporate lessons
learned to ensure sustainability from the outset and avoid painful reforms later.
Incentives to work increase as people receive information on future pension income. Evidence from
the United States shows that the framing of public messages regarding pensions matters for when
benefits are claimed. Low-cost interventions (informational brochures, invitation to a short web-
tutorial) informing older workers about expected pension benefits increased labor force participation
one year later by 4 percentage points relative to the control group.123 Pension reforms have routinely
been accompanied by financial education information campaigns in the OECD.124 No equivalent
research is yet available for L/MICs, but there is evidence that information campaigns geared towards
changing jobs and career decisions, for example financial education or career guidance, can impact
individual and family choices.125
Labor regulations can also allow for greater flexibility in work arrangements to accommodate
varying and changing needs among mature workers. For example, allowing for more part-time work,
temporary work, or fixed-term contracts, can in fact serve mature workers looking to adapt their
115 Lorenz et al. 2020.
116 Staubli and Zweimuller 2013, Ardito 2021.
117 Graham 2014.
118 OECD 2017, Henkens et al. 2021, Munnell and Walters 2019.
119 OECD 2017.
120 Busch et al. 2021.
121 Lorenz et al. 2020, Munnell and Walters 2019.
122 Fouejieu et al. 2021.
123 Liebman and Luttmer 2015.
124 OECD 2008.
125 E.g. Jensen 2010, 2012, Alzúa et al. 2021, OECD 2021. Information on trade-specific earnings, for example,
can have substantial effects on women’s choices to enter comparatively high -earning trades traditionally
reserved for men (Gassier et al. 2022).
23
working schedules. Between 2007 and 2019, over 100 countries undertook significant reform of
employment regulations, including on fixed-term contracts, severance payments, annual leave, and
working-time arrangements, but there is no evidence regarding the impact on employment for mature
workers.126
Tax reform can reduce disincentives to work. This is especially the case for workers with a larger
reserve labor supply, typically women, less-educated workers, and mature workers.127 OECD countries
(Australia, Denmark, the Netherlands, Sweden, and the United Kingdom, among others) have
introduced tax credits, in some cases with the credit increasing with the age of the worker. Tax credit
reform linked to pension reform increased participation among mature workers in Sweden, except for
self-employed and higher-earning workers, among whom the “slack” may be smaller.128
Improving access to quality services
Subsidizing child- or other forms of care for family members can improve labor market participation
and earnings outcomes. Affordable childcare or long-term care for sick and elderly persons can relieve
mature workers from informal care burdens and help them manage personal and professional
commitments. In Rio de Janeiro, Brazil, a lottery was used to allocate public center-based daycare to
households. Access to daycare centers was associated with sustainable increases in household
income, due to grandparents’ increased labor income. Grandparents’ earnings, likelihood of
employment, hours worked, and social security contributions increased measurably.129 This positive
association between care services and participation is consistent with research on the impact on
women’s labor market outcomes of different forms of childcare provision in Latin America, Russia,
and the EU, where studies have found strong effects on activation, employment, and hours worked.130
A quasi-experimental study in Spain focused on the implementation of successive care-subsidy
reforms, involving cash subsides as well as care services. It concluded that changes in care subsidies
had a stronger effect on early retirement decisions than reforms tightening options for early
retirement.131
Safer transportation helps vulnerable groups access jobs. In Lima, Peru, an improved urban transport
system led to significant gains in employment and earnings for women (but not for men). This
demonstrates that infrastructure investments that make it more convenient and safer to use public
transport can generate important labor market impacts for groups that are more vulnerable to
personal safety threats during travel, that have care obligations that compel them to work closer to
home, and that rely heavily on efficient transport modes.132 Better transportation is similarly likely to
improve mobility for mature workers who depend on public transportation but who may also be
vulnerable when commuting.
126 Kuddo 2018 and World Bank 2019.
127 Meghir and Phillips 2010.
128 Laun 2017.
129 Attanasio et al. 2017.
130 Mateo Diaz and Rodriguez-Chamussy 2016, Del Boca and Locatelli 2006, World Bank 2017.
131 Costa-Font and Vilaplana-Prieto 2022. Cash subsidies can have both positive and negative effects on
caregivers’ labor force participation, as income effects may reduce participation.
132 Martinez et al. 2019.
24
Strengthening human capital
Subsidizing skills training, and addressing skills-information asymmetries, is a common strategy for
increasing workers’ employability, but requires careful design. With the right training methods,
adults and mature workers can learn new skills to good effect.133 Tailoring programs to serve the
needs of older workers will be essential. First, the design of training interventions needs to consider
training modalities (see below), motivation among individuals and employers for taking up training
offers, and the need to build capacity in the training sector.134 Second, the deadweight and
substitution losses associated with training can be high135 and, on average, many training programs
fail to have any impact. However, results vary tremendously, and impacts can grow over time,
suggesting that design and targeting are key.136
Training that is not adapted to older workers’ needs could reduce the value of training. Some studies
have found that the training of older workers has lower impacts on key dimensions such as learning,
career development, earnings, or job security, and that older employees can be less ambitious in their
training participation.137 The generally low uptake of adult training programs is at least partial
evidence that many current programs do not fulfill needs. A likely reason is that many training
programs are not adapted to older workers’ capabilities and learning styles: notably, they do not
provide informal and self-paced learning and work-integrated approaches or make use of older
workers’ cognitive strengths, such as the capacity to direct and act on information received.138 In
countries with high informality, training programs that do not factor in the opportunity cost of
attending training for workers’ earnings are likely to be less effective, as are programs that fail to
acknowledge how high-stress life circumstances may affect workers’ mental capabilities.139
Countries are using different instruments to increase individual access to, and incentives for, lifelong
learning, including voucher schemes and training subsidies. With individual learning schemes
(including vouchers, individual learning accounts, and training savings accounts), individuals choose
their own options for skills development. To deliver higher skills accumulation, these accounts need
to be embedded in a broader framework addressing other skills constraints, including the availability
of high-quality and relevant training opportunities, information and guidance services, paid training
leave, and skills recognition frameworks.140 Voucher-based systems can help stimulate training,
especially for workers in non-traditional or less stable forms of employment. Voucher systems have
had mixed success, however, especially for hard-to-serve groups such as low-skilled workers.
Experience shows that simple design, adequate and predictable funding, effective information and
guidance, and a focus on supporting high-quality training matter significantly.141 Specific outreach
efforts are needed to target low-skill groups, as well as employers, and encourage them to co-invest
in skills development.142 For example, an information campaign on a training program in Germany
133 Knowland and Thomas 2014.
134 Glick et al. 2015.
135 McKenzie 2017a.
136 Card et al. 2018.
137 Zwick 2011.
138 Picchio 2021, Thomas et al. 2020, Knowland and Thomas 2014.
139 Saraf et al. 2018.
140 European Union Council 2022 and OECD 2019d.
141 OECD 2019c.
142 OECD 2019c, Vodopivec et al. 2019.
25
succeeded in stimulating uptake only for workers below age 45, suggesting that older workers were
considered less interesting due to limited pay-off time (tenure) or lower ability.143
Mature workers’ motivation and aspirations can be strengthened with targeted training and
organizational approaches. Experience from entrepreneurship and employment programs in L/MICs
shows that trainings focused on psychosocial, or “mindset,” components have contributed to
successful labor market (or business) outcomes, sometimes more so than technical training.144 These
trainings focus on, inter alia, future-oriented and proactive thinking and a “can-do” attitude. This type
of training, when delivered adequately, could be helpful to mature workers who may need or want
change in their work in order to stay engaged longer. Training programs including relatable role
models have been successful, for example in Chile and Kenya. The exposure to a role model was, in
fact, more important than the information or training the role model provided.145 There is evidence
that older people continue to identify role models in their working life just as younger people do; that
these role models could be significantly younger than the workers themselves; and that being able to
identify role models played a significant part in worker commitment and satisfaction.146 Giving mature
workers the opportunity to participate in teams comprising people with varied backgrounds and skills
could help provide such role models and thus raise motivation and aspirations, and would also support
higher overall productivity.147
Given that mature older adults learn better on the job, encouraging mature apprenticeship
programs could also be considered. The evidence on the impact of apprenticeships and internships
suggests that classroom training combined with on-the-job training may have stronger impact on labor
market outcomes than skills training or on-the-job training alone.148 When coupled with high-quality
trainers, apprenticeships can be effective in raising employment.149 However, the majority of
programs and evidence are focused on youth with limited relevance for mature workers.
Demand-side interventions: Raise incentives and remove barriers to hiring and
investing in mature workers
Policies directed to potential employers focus on increasing incentives to hire mature workers by
addressing regulatory constraints that raise labor costs, and on initiatives to foster firm-provided
training to increase skills and thereby productivity levels.
Closing the gap between labor costs and productivity
Regulatory reform, information, and incentives can help reduce gaps between mature workers’
earnings and their productivity. Japan, the Republic of Korea, and Singapore offer examples of
countries that have implemented policies to reduce seniority wage practices. Korea has actively
promoted, disseminated, and subsidized performance-based compensation models. As part of a
broader effort to foster the hiring of senior workers, Japan and Singapore have introduced financial
143 Van den Berg et al. 2018
144 See forexample Anderson-MacDonald et al. 2016, Bloom et al. 2018, 2010, Campos et al. 2017, Glaub et al.
2014, McKenzie and Puerto 2017.
145 Lafortune et al. 2018, Brooks et al. 2018.
146 Gibson and Barron 2003.
147 Göbel and Zwick 2013.
148 J-PAL 2023.
149 Crépon and Premand 2018, Hardy et al. 2019.
26
grants to incentivize firms to incorporate worker performance into their wage and personnel
system.150 Public sector reform can lead the way by softening seniority wage practices, fully or
partially moving towards performance-based pay.
Similarly, governments can reform social contributions and employment protection legislation to
lower costs while ensuring adequate social protection support. This can include reforming systems
for severance pay and different entitlements that often increase automatically with tenure. Labor
regulations in several countries have undergone reform in the past decades, as policymakers attempt
to balance the need to protect workers with the need to allow for flexible solutions that do not unduly
limit labor demand. The evidence on such reforms and employment effects is generally mixed,
however. A broad conclusion is that when extreme forms are avoided, the impact on employment is
modest.151 The evidence of payroll tax cuts on employment is likewise varied. Some cross-country
studies point to substantial increases in employment (Latin America) and reductions in informality
(Central and Eastern Europe and Latin America). Other country-level studies of payroll tax cuts,
however, show both low to no employment effects (Argentina, Chile), and significant employment
effects (Colombia, Türkiye).152 As a guideline, policy makers could strive for a “flexicurity” approach
which combines broader reforms to severance pay and other benefits with permanent contracts that
reduce labor costs while increasing effective protection of workers in case of employment shocks.153
For example, reforms need to be combined with policies that strengthen unemployment benefit
systems, which remain underdeveloped in many L/MICs.154 Reduction in social contributions needs to
be paired with increased financing of social protection through general taxation.155
Wage subsidies are intended to help address both high labor costs and information asymmetries
about worker competence but require strong targeting and timing to deliver benefits. Wage
subsidies reduce the cost of labor for some time (compensating for the fact that a worker may be
more unproductive in the beginning of employment) and help employers reduce hiring risks by
providing them with the opportunity to evaluate skill levels more comprehensively than is possible in
the hiring process. Evidence from North Macedonia on wage subsidies (not age-specific) suggests that,
when well designed and targeted, such subsidies can help disadvantaged groups overcome
information constraints or externalities.156 Yet they often suffer from low uptake and low
sustainability over the long run.157 Experience from Finland and Belgium suggests that wage subsidies
specifically targeted to older workers may delay early retirement but carry such deadweight losses
that they are not cost effective. Subsidized work appears simply to displace unsubsidized work, with
little net gain in employment of older workers. 158
Addressing ageism
Age anti-discrimination laws (ADL) exist in many developing countries, but weak enforcement may
render them less effective. An overview from 2008 showed that laws that prohibit discrimination in
150 OECD 2019b.
151 Betcherman 2015, World Bank 2022b.
152 Pagés 2017.
153 OECD 2019b.
154 ILO 2021.
155 Packard et al. 2019.
156 Armand et al. 2020.
157 McKenzie 2017a.
158 Vodopevic et al. 2019, Boockmann 2015.
27
the workplace due to age were in place in about 50 countries,159 many of them developing countries.
High informality or weak enforcement reduces the impact of these regulations, however. The general
evidence on labor law enforcement in developing countries is not conclusive, largely due to the lack
of studies addressing this issue.160
Social campaigns to provide information and raise awareness have proved successful in influencing
stakeholders toward employing older workers. In Germany, a relatively low-cost local marketing
campaign used banners, interviews, job fairs, and information brochures to debunk myths and inform
employers (and others) about the value of mature workers. The intervention helped increase
retention of mature workers.161 More generally, raising awareness about implicit stereotypes can
have significant payoffs: an intervention addressing implicit stereotypes about immigrants among
Italian schoolteachers raised school grades for immigrant children.162 Research undertaken by the
World Bank shows that social media campaigns can be highly effective in influencing norms and can
allow for very granular targeting.163 Similarly, “edutainment” approaches that use entertainment
media to convey educational narratives, aspirational role models, and “new” norms to a large
population may work: evidence from TV series seeking to improve sexual health and attitudes toward
gender-based violence (GBV) in Sub-Saharan Africa showed strong impacts on norms and practices.164
Promoting firm investment in workers’ human capital
Firms can help extend productive working lives by providing mature workers with access to continuous
skills development, complementary technology, and working environments adapted to their needs,
along with targeted support that reduces health risks in old age.
It is critical but difficult to increase firms’ investment in updating and upgrading workers’ skills,
including among mature workers. Leveraging private sector support is important to increase available
resources for training, to increase private sector ownership of the skills agenda, and to garner the
specific knowledge and insights of firms regarding their current and future skill needs.165 Governments
in many L/MICs have implemented different incentives, including private sector-financed approaches
(e.g., training funds) and budget-funded financial incentives, but with mixed results.
Training funds have been a common approach to provide resources to invest in training, especially
for small and medium enterprises (SMEs), but such funds require strong governance, transparency,
and solid links to the private sector to work well. In about half of the world’s developing countries,
there is a national training skills or training fund in place, most of them financed through a payroll levy
on employers.166 These training funds have received criticism on several grounds, however. They tend
to mainly benefit large firms and may represent large deadweight loss (subsidizing training that would
have taken place without support) at the price of higher tax rates. Training funds have also sometimes
been used to support the general budget, or for cross-subsidizing training in informal, non-
contributing firms. Finally, training has often been delivered through public institutions that are less
connected with the demand side. Many training funds are now being reformed to align contributions
159 Ghosheh 2008.
160 Ronconi 2019.
161 Homrighausen and Lang 2019.
162 Alesina et al. 2018.
163 https://blogs.worldbank.org/voices/using-social-media-change-norms-and-behaviors-scale.
164 Banerjee et 2019a, 2019b.
165 UNESCO 2022.
166 Estimates based on World Bank Employing Workers 2020.
28
better with benefits, for example by including government/donors as contributors, or strengthening
governance, transparency, and private sector voice in the use of funds.167
Financial incentives to foster training have so far had limited impact on older workers’ employment
in HICs. In Germany, a firm-level subsidy program targeting workers ages 45 and above in SMEs was
found to have improved job stability and employment by prolonging working life; programs with long
duration had a stronger effect on both jobs and earnings.168 For tax incentives, both substitution and
deadweight losses appear to be significant, however. Direct subsidies, often structured as co-financing
arrangements, may be more effective insofar as they facilitate the targeting of specific groups of firms
and employees.169
Low-cost information campaigns (within companies, and to companies) may go some way towards
raising awareness and increasing firms’ own training initiatives or uptake of public skills programs,
especially among SMEs. In many OECD countries, governments run campaigns and provide employers
with toolkits and guidance material on how to best address skills and health issues.170
Complementary investments in organizational change or infrastructure can also have significant
productivity payoffs. Adapted technology, ergonomic office equipment, mixed-age teams, and other
adjustments can help workers stay healthy and engaged. A much-cited example of the significant
potential payoffs of such policies is the auto manufacturer BMW’s Dingolfing plant in Germany, where
a small investment in ergonomics and work organization (workstation rotation) resulted in a 7 percent
productivity increase, exceeded quality targets, and reduced absenteeism.171
Interventions focusing on workplace health should help increase worker retention and increase
mature workers’ productivity; however, there is little evidence as to what works to encourage
these. The United Kingdom targets SMEs with a specific national occupational health service to this
effect.172 Occupational health and safety programs have been shown to improve risk factors for
injuries and chronic illnesses, many of which increase with age.173 This can include both access to
health care and support for healthy lifestyles – diet, exercise, and social interaction, which also affects
labor market participation as well as productivity.174 However, there is no conclusive evidence of
positive impacts of such interventions on productivity or labor force participation, largely due to lack
of quality studies.175 Some positive examples on which to build do exist, however. In the United States,
an occupational health intervention involving access to physicians was associated with a significant
reduction in both sickness absence and early retirement.176 Interventions could also be adapted to the
informal sector context. A study of informal sector workers in Thailand showed that safe working
practices improved older workers’ work ability, suggesting that targeted information/promotion
programs could help increase their productivity.177
167 UNESCO 2022.
168 Singer and Toomet 2013.
169 Picchio 2021.
170 OECD 2019b.
171 EBRD 2020, Loch et al. 2010.
172 OECD 2019b.
173 Anger et al. 2015.
174 Prinz et al. 2018.
175 Poscia et al. 2016.
176 Crawford et al. 2009.
177 Thanapop and Thanapop 2021.
29
Fostering senior entrepreneurship
Government or NGO-based programs targeting senior entrepreneurship (start-up as well as existing
entrepreneurs) are emerging across HICs, but there is little evidence on impacts. Evidence from the
United States suggests that high-growth entrepreneurs, even in tech-intensive industries, are middle-
aged rather than young and, in many contexts, entrepreneurship programs appear to work best for
participants with more experience.178 Yet, despite the importance of senior entrepreneurship, there
is little evidence on what interventions work to encourage senior-led business start-up and growth,
especially not from L/MICs, where most entrepreneurship programs target youth. There is, however,
significant evidence on entrepreneurship programs in L/MICs that have successfully provided financial
support, business advice, training and market access – often in combination – to
microentrepreneurs.179 Many entrepreneurs face a multitude of constraints (aspirations, skills,
information, finance, networks) and are best served by comprehensive programs, although some
potential high-growth firms may mostly be limited by credit constraints.180 Given seniors’ specific
needs, interventions could focus on removing constraints including (often) lower technical skills,
reduced tolerance for financial risk, and shorter time horizon; interventions might also provide
support to foster entrepreneurial mind-sets.181 Programs in HICs have focused on digital skills, connect
seniors with younger co-investors, provide targeted counseling and entrepreneurship training, and
target micro-finance programs to this group, much as is done for women or other groups with special
needs and constraints.182 Role models may again prove useful for inspiration and knowledge
transfer.183
Intermediation interventions – Strengthen the capacity of employment services to
improve matching
Public and private intermediation services can be strengthened to improve the matching of older
workers to jobs. Most European public employment services have no specific policies for older
workers.184 A first step is to change the age criteria for program eligibility, often capped at retirement
age, so that older workers are not automatically excluded from different forms of active labor market
support. A second step would be to fully capacitate the employment service workforce in assisting
older workers. This will require information to rectify ageist views among staff, identifying specific
constraints among mature workers (mobility, digital literacy, training needs and modalities, ageist
norms, and others), and stronger capacity within employment services to reach out to employers for
the benefit of mature workers. Strengthened employment services could provide tailored information
on job opportunities and reskilling opportunities for older workers, as well as training in job search
skills, including in digital skills that are often lacking but increasingly essential for the job search.
Comprehensive approaches involving employers are needed to improve job matching. In Germany,
“regional employment pacts” under the “Initiative 50plus” were created with employment services
and the private sector. These successfully included targeted efforts to reactivate and reintegrate
178 Azoulay et al. 2020.
179 Jayachandran 2020.
180 McKenzie 2017b
181 Isele and Rogoff 2014.
182 Isele and Rogoff 2014.
183 Omrani amd Ludivine 2019.
184 European Network of Public Employment Services 2019.
30
mature workers with more and better jobs. The pacts have reached out to firms and other
stakeholders and have included targeted profiling, assessments, specific training measures,
internships, and information campaigns. These programs have primarily benefitted younger seniors
(average age 54), however.185
Employment services could also help workers move out of arduous occupations to support longer
working lives, although the evidence suggests this is a challenging task.186 Belgium, for example,
provides a subsidy to workers who transition into a less arduous occupation with the same employer
and lose income as a result.187 Retraining and job search assistance can also be specifically targeted
to groups particularly likely to exit the workforce early due to working conditions.188
6. Conclusions: Some meta-lessons for productive longevity
The world’s population is aging rapidly in both poor and rich countries, calling for broad policy
reform to maintain welfare levels across generations. This paper has focused on the set of policies
that may help increase “productive longevity” by maintaining mature workers in the active labor force
and increasing their productivity. These objectives can be considered “low-hanging fruit”: it is likely
considerably easier to assist and convince active workers to stay in the labor market, with incremental
efforts to strengthen human capital and tweak incentives, than to activate and train people out of
long-term unemployment or inactivity towards the end of the potential working life. As our review
shows, the research agenda is only beginning to develop, especially for low- and middle-income
countries, and the evidence is still thin in many areas. With this important caveat in mind, a few
concluding observations follow.
All countries, rich and poor, will need to put productive longevity on the policy agenda. Many MICs
are already dealing with aging, even shrinking, populations; both LICs and MICs will face rapidly
growing numbers of elderly in the future, and the shift from young to older populations can happen
quickly. A wide range of policy instruments are needed to protect welfare levels in an aging world.
Prolonging working lives (for a particular set of workers) and increasing the productivity of mature
workers (across the board) is part of this agenda.
The optimal policy mix will differ depending on the country context. Mature workers, especially in
poorer countries, are a heterogeneous group, with many workers, often the majority, working
informally and in low-productivity occupations. Given high informality and weak enforcement,
regulatory reform to social insurance, labor regulations, and taxation will only affect a smaller segment
of workers, as will initiatives directed only at formal firms. In this dual labor market, however, it is this
(relatively small) group of formal sector workers that can reasonably be expected to work longer. For
the remainder of the mature workforce, policy needs to focus on how to avert old-age poverty by
providing social protection and raising the productivity of their work.
Poorer countries can learn from richer countries’ past mistakes and design social protection and
regulatory frameworks adequately for an aging population. Many L/MICs are now developing their
social insurance systems and putting in place taxation and employment regulatory frameworks. Even
185 OECD 2019b.
186 OECD 2019b.
187 OECD 2018.
188 OECD 2019c.
31
with low coverage rates, poorly designed systems can be extremely costly. By acting preemptively,
countries can avoid repeating mistakes that have taken HICs decades to unravel with reforms that are
proving difficult and politically costly.
The impact and cost effectiveness of productive longevity policies need to be weighed against the
payoff to investing in raising human capital across the entire population. Poorer countries face
different and perhaps starker intergenerational policy tradeoffs than do richer countries. Many lower-
income countries’ older populations are characterized by low levels of human capital and large gaps
relative to younger generations. Significantly raising productivity levels of the mature workforce
through skills investments may be very costly, especially in countries with limited resources for
investment. Some countries thus may focus on investing heavily in the human capital of children and
youth (early childhood development, schooling) as well as younger adults (life-long learning). For the
older population, policy will center on strengthening human capital with health interventions and
strategic, demand-led skills development, supporting the businesses operated by mature workers, and
providing social safety nets.
Even with these constraints, countries can work to identify “win-win” policies that benefit all
generations. For example, providing childcare and long-term care for the elderly, thus alleviating the
care burden, can stimulate labor market participation and the move to more productive work in both
older and younger workers, in particular women. Facilitating access to work, for example with safer
transportation systems, will have benefits for vulnerable groups in general.
Productive longevity does not affect all groups similarly, and more nuanced analysis is also needed.
This paper is a first attempt at raising policy areas and mapping out the associated evidence at an
aggregate level. Even so, the need for a differentiated approach shines through, perhaps especially
from a gender perspective. Women live longer than men but generally have lower pensions. They are
less likely to be in paid work, have lower average salaries, and face more obligations to provide
informal care. There is even some evidence that women are worse affected by ageism. At the same
time, there is some evidence from the United States that, although age-friendly jobs in the country
have increased, lower-skilled male workers have been left out of employment gains.189 Looking in
detail at how gender, skills, location and other factors affect productive longevity will be essential to
develop adequate policies.
More evidence is needed as to what works for productive longevity. As this review shows, most
evidence for what works in terms of prolonging working lives is based on HICs, which have faced aging
pressures for a longer time. Even in these countries, the knowledge base is still very much under
development. Where available, the evidence is often mixed, pointing to the challenges associated with
this policy agenda. Much less is known about what works for a developing-country context
characterized by, inter alia, higher informality and less-developed social protection systems, higher
shares of self-employment, lower skill and productivity levels, smaller firms, and different norms
around co-habitation and care responsibilities. To identify the best responses to the aging challenge,
a comprehensive research agenda will need to be developed, and soon.
189 Acemoglu et al. 2022.
32
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ANNEX TABLE 1. LABOR MARKET DATA FOR OLDER ADULTS
Russian
Colom- Costa Federati South
Brazil Chile bia Rica Mexico on Africa EU27 OECD
Demographic situation
-- Old-age dependency ratio 14% 18% 13% 13% 11% 23% 9% 31% 64%
-- Effective labour force exit age (years) Men 65 68 70 70 70 63 62 64 66
Women 62 63 63 64 66 61 57 63 64
-- Gender gap in exit (years) 3 5 7 6 4 2 5 1 2
Employment
-- Employment rate, 50-74 (% of the age group) 36 49 51 45 50 38 31 48 51
of which 50-54 62 66 66 66 66 85 57 81 79
55-64 44 56 54 50 52 51 37 60 61
65-69 22 30 35 22 35 7 10 15 23
70-74 10 18 23 15 25 .. .. 7 11
-- Gender gap in employment, 55-64 (% point gap) 26 32 34 36 36 18 13 12 13
Job characteristics
-- Incidence of part-time work, 55-64 (% of total
employment) - 19 17 35 28 13 17 15 19
of which involuntary 55-64 (% of part-time
work) - 45 36 - - 27 - 23 20
-- Incidence of temporary work, 55-64 (% of employees) - 19 18 6 - 6 - 5 8
-- Incidence of self-employment, 55-64 (% of total
employment) 46 29 63 44 47 8 24 18 22
-- Full-time earnings, 55-64 relative to 25-54 (ratio) - 0.96 1.19 1.26 1.0 - - - 1.06
Dynamics
-- Retention rate for workers currently aged 60-64 (% of
employees t-5) 28 43 - 37 46 - - 53 52
-- Hiring rate 55-64 (% of employees) 34 16 24 14 13 - - 6 8
Joblessness
40
Russian
Colom- Costa Federati South
Brazil Chile bia Rica Mexico on Africa EU27 OECD
-- Unemployment rate, 55-64 (% of the labour force) 7.9 6.9 10.5 12.0 2.6 3.6 11.2 5.2 5.2
-- Incidence of long-term unemployment, 55-64 (% of total
unemployment) - - 7.9 7.1 2.6 26.0 68.6 47.9 38.7
Employability
-- Share of 55-64 with tertiary education (% of the age
group) 15 16 16 21 15 50 15 26 29
Absolute (% of all employed in the age group) - 33 - - 17 - - 40 41
Relative to employed persons aged 25-54 (ratio) - 0.67 - - 0.50 - - 0.81 0.79
Source: OECD older worker scoreboard, https://www.oecd.org/employment/ageingandemploymentpolicies.htm
41