FRBSF Economic Letter

2017-06 | February 27, 2017 | Research from the Federal Reserve Bank of San Francisco

Age Discrimination and Hiring of Older Workers

David Neumark, Ian Burn, and Patrick Button

Population aging and the consequent increased financial burden on the U.S. Social Security
system is driving new proposals for program reform. One major reform goal is to create
stronger incentives for older individuals to stay in the workforce longer. However, hiring
discrimination against older workers creates demand-side barriers that limit the
effectiveness of these supply-side reforms. Evidence from a field experiment designed to
test for hiring discrimination indicates that age discrimination makes it harder for older
individuals, especially women, to get hired into new jobs.

In coming decades, the share of seniors age 65 and older in the U.S. working-age population is projected to rise
sharply—from about 19% currently to 29% in the year 2060—approaching equality with the shares of those aged
25–44 and 45–64 (Figure 1). With much lower employment among those aged 65 and over, the aging of the
population will pose fundamental public policy challenges, as the “dependency ratio”—the ratio of nonworkers to
workers—rises sharply and labor force growth slows.

Policy efforts to boost the labor supply of older Americans have focused on reforms to Social Security, including
reducing benefits for those claiming at the early eligibility age of 62, increasing the full retirement age (with
additional increases scheduled in the future), and reducing the taxation of earnings after Social Security benefits
are claimed—which increases benefit claiming at earlier ages but also increases labor supply post-claim (Martin
and Weaver 2005, Figinski and Neumark 2016). Efforts to encourage people to work longer via these supply-side
reforms may be thwarted, however, by age
discrimination in labor markets. This Figure 1
potential for age discrimination can be Projection of U.S. working-age population by age group
Percent
doubly problematic: If businesses don’t 35
respond to the policy-induced larger labor Ages 25-44

supply by hiring older workers, it could 30

Ages 45-64
lead to even harsher policy reforms for
25
seniors with more adverse effects on older Ages 65+

workers who are not actively seeking to 20

work longer.
15

Age discrimination in hiring may be 10

critical to whether older people can work
5
substantially longer, because many seniors
transition to part-time or shorter-term 0
partial retirement or “bridge” jobs at the 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
Source: U.S. Census Bureau (2014).
end of their careers (see, for example,
FRBSF Economic Letter 2017-06 February 27, 2017

Johnson, Kawachi, and Lewis 2009). Moreover, current policies to combat age discrimination, which rely in
large part on private litigation for enforcement, may be ineffective at reducing or eliminating age discrimination
in hiring. In particular, the potential rewards to plaintiffs’ attorneys may be too low to encourage sufficient
enforcement, because it is difficult to file a class action lawsuit, and economic damages from discrimination in
hiring may be small.

In this Economic Letter, we report on new evidence from a field experiment testing for discrimination in hiring
against older workers near retirement age. The evidence points to such discrimination, particularly against older
women. These findings suggest that demand-side policies to reduce discrimination in hiring could also be
helpful in boosting older workers’ employment to meet the challenges of population aging.

Studying age discrimination

In general, economists find it challenging to establish evidence of labor market discrimination. A working
definition of discrimination is when equally productive people are treated differently in the labor market—in this
case, with respect to getting hired—simply because of their group membership, whether based on age, race, sex,
etc. Whether such discrimination is based on outright dislike or stereotyping about group characteristics, it is
illegal under U.S. civil rights laws. When we simply see different outcomes for groups in observational data,
however, it can be hard to determine whether the difference arises solely because of group membership—which
constitutes discrimination—or because of other differences between the groups. For example, in the context of
age discrimination, one might posit that longer durations of unemployment for older workers arise not because
of hiring discrimination, but because older workers are less willing to accept certain kinds of jobs, such as jobs
with lower wages or greater physical demands.

To address these measurement challenges, social scientists have developed tests for hiring discrimination based
on “audit” or “correspondence” studies. These studies are designed to mimic controlled experiments by creating
artificial job applicants who have identical job-related background characteristics other than race, ethnicity, or
gender. Hence, when they apply for the same real-world jobs, differences in hiring outcomes are plausibly
attributable to discrimination. Audit studies use actual applicants coached to act alike and measure job offers as
the outcome. Correspondence studies create applicant profiles (on paper or electronically) and measure
callbacks for job interviews, which past research indicates are predictive of differences in hiring rates.
Correspondence studies are now used far more commonly, because they can collect larger samples of job
applications and outcomes, especially using the Internet; because they avoid “experimenter effects” that can
influence the behavior of the actual applicants used in audit studies (Heckman and Siegelman 1993); and
because they impose less burden on real-world employers. These methods have been used to study
discrimination in hiring based on race, gender, ethnicity, age, and even—in the context of recovery from the
Great Recession—length of prior unemployment spells.

Field experiment evidence on age discrimination

To garner evidence on the importance of age discrimination in hiring, in particular at ages near retirement
where policymakers are trying to strengthen incentives to work longer, we carefully designed a correspondence
study to overcome potential biases in past studies on age discrimination (Neumark, Burn, and Button 2016). We
created realistic but fictitious resumes for young (aged 29–31), middle-aged (aged 49–51), and older (aged 64–
66) job applicants. Then we submitted these resumes to ads for job categories that employ large numbers of
fairly low-skilled workers of all ages, and that do at least some hiring of both older and younger workers. The

2
FRBSF Economic Letter 2017-06 February 27, 2017

jobs included administrative assistants and secretaries (to which we sent female applicants), janitors and
security guards (male applicants), and retail sales (both genders). Note that the experiment covers fairly low-
skilled jobs. That is because labor economists using audit and correspondence study methods believe that
realistic responses to fictitious job applicants are less likely in more high-skilled labor markets where employers
are more likely to be familiar with job applicants.

We specifically crafted variations on resumes that older workers actually present, including one that showed the
common path of moving to a lower-skill job later in life (think, somewhat stereotypically, of store greeters at
Walmart).

We leveraged technology to conduct our study on a massive scale. In the end, we sent triplets of otherwise
identical young, middle-aged, and older fictitious applications to over 13,000 positions in 12 cities spread across
11 states, totaling more than 40,000 applicants—by far the largest scale audit or correspondence study to date.

Overall, across all five sets of job applications, the callback rate was higher for younger applicants and lower for
older applicants, consistent with age discrimination in hiring. However, there are some important differences.
The first two sets of bars in Figure 2 show the callback rates for female job applicants, first to administrative jobs
and then to sales jobs. In both cases, there is a distinct pattern of callback rates being highest for the young
applicants, lower for the middle-aged applicants, and lowest for the old applicants. Relative to the young
applicants, older female applicants for administrative jobs had a 47% lower callback rate, 7.6% versus 14.4%. In
sales, the difference was a bit smaller with a 36% lower callback rate—18.4% versus 28.7%. As well as being
large, these gaps are also highly statistically significant.

For male job applicants—in sales, security, and janitor jobs—there is also a lower callback rate for older men in
general. But in this case the age pattern is not as consistent or pronounced, and in some cases the estimated
differences between the young and old groups are not statistically significant. For sales jobs, which we can
directly compare with women’s results, the difference in callback rates between old and young applicants shows
a slightly smaller but still statistically significant 30% drop, 14.70% versus 20.89%.

Figure 2
Overall, the results in Figure 2 indicate
Comparison of job applicant callback rates by age
that women face worse age discrimination
Percent
than men. In retail sales, where we could 40
directly compare results for both genders, Ages 29-31
35 Ages 49-51
we found a sharper drop-off in callback
Ages 64-66
rates with age for women than for men. 30

And for the solely male applicants to 25

janitor and security jobs, the pattern of
20
lower callback rates for older applicants
was less clear than for the older versus 15

younger solely female applicants to 10

administrative or retail jobs.
5

Our study contains a number of other 0

Admin (women) Sales (women) Sales (men) Security (men) Janitors (men)
analyses, but they coalesce around the
Source: Authors’ calculations, Neumark et al. (2016).
same three messages. First, there is
3
FRBSF Economic Letter 2017-06 February 27, 2017

evidence of age discrimination in hiring, for both women and men. Second, while both middle-aged and older
applicants experience discrimination relative to younger applicants, older applicants—those near the age of
retirement—experience more age discrimination. And third, women experience more age discrimination than
men do. We do not have evidence on why age discrimination may be worse for older women, but it could be
because applicant appearance matters in our sample of low-skilled jobs, and the effects of aging on physical
appearance are evaluated more harshly for women than for men (Deutsch, Zalenski, and Clark 1986).

Conclusions
Our field experiment provides compelling evidence that older workers experience age discrimination in hiring in
the lower-skilled types of jobs the experiment covers. This evidence implies that there are demand-side barriers
to significantly extending work lives. Reducing these barriers would likely directly help boost employment of
older workers to meet the challenges of population aging. Furthermore, there is evidence that reducing age
discrimination can increase the impact of supply-side reforms intended to induce higher labor supply among
older workers (Neumark and Song 2013).

The evidence that older women experience more age discrimination than older men provides an additional
argument for combining policies that reduce demand-side barriers to hiring with supply-side reforms to
encourage people to work longer. Supply-side reforms typically operate in part by reducing retirement benefits
at younger ages. Already many women outlive their husbands and end up quite poor (Gornick et al. 2009). If age
discrimination is particularly severe for older women, then using supply-side policies alone to induce later
retirement may mainly reduce older women’s retirement benefits without doing much to increase their
employment.

David Neumark is Chancellor’s Professor of economics and Director of the Economic Self-Sufficiency
Policy Research Institute (ESSPRI) at the University of California, Irvine, and a visiting scholar at the
Federal Reserve Bank of San Francisco.
Ian Burn is a doctoral student in economics at the University of California, Irvine.
Patrick Button is an assistant professor of economics at Tulane University.

References
Deutsch, Francine M., Carla M. Zalenski, and Mary E. Clark. 1986. “Is There a Double Standard of Aging?” Journal of
Applied Social Psychology 16, pp. 771–785.
Figinski, Theodore, and David Neumark. 2016. “Does Eliminating the Earnings Test Increase the Incidence of Low
Income Among Older Women?” Research on Aging (available online).
Gornick, Janet C., Teresa Munzi, Eva Sierminska, and Timothy M. Smeeding. 2009. “Income, Assets, and Poverty:
Older Women in Comparative Perspective.” Journal of Women, Politics & Policy 30, pp. 272–300.
Heckman, James, and Peter Siegelman. 1993. “The Urban Institute Audit Studies: Their Methods and Findings.” In
Clear and Convincing Evidence: Measurement of Discrimination in America, eds. Fix and Struyk. Washington,
DC: The Urban Institute Press, pp. 187–258.
Johnson, Richard W., Janette Kawachi, and Eric K. Lewis. 2009. Older Workers on the Move: Recareering in Later
Life. Washington, DC: AARP Public Policy Institute.
Martin, Patricia P., and David A. Weaver. 2005. “Social Security: A Program and Policy History.” Social Security
Bulletin 66, pp. 1–15. https://www.ssa.gov/policy/docs/ssb/v66n1/v66n1p1.html
Neumark, David, Ian Burn, and Patrick Button. 2016. “Is It Harder for Older Workers to Find Jobs? New and Improved
Evidence from a Field Experiment.” NBER Working Paper 21669.
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FRBSF Economic Letter 2017-06 February 27, 2017

Neumark, David, and Joanne Song. 2013. “Do Stronger Age Discrimination Laws Make Social Security Reforms More
Effective?” Journal of Public Economics 108, pp. 1-16.
U.S. Census Bureau. 2014. “2014 National Population Projections: Summary Tables, Table 3.” Available at
https://www.census.gov/population/projections/data/national/2014/summarytables.html

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