Ageism in the labor market: estimating earnings discrimination against older workers

In this paper we attempt to determine the degree to which older persons employed full-time experience a decline in earnings not related to a decline in productivity. We label such a decline in earnings "discrimination." Using panel data for a cohort of men aged 45 to 54 in 1966, we examined trends in earnings between 1966 and 1976 and the effects of labor force experience on earnings controlling for factors related to productivity, such as health, time on the job, and specific occupational training, as well as other factors known to influence earnings levels. Comparing earnings attainment models estimated at both time periods, the effect of experience on earnings was negligible in 1966 but substantial and negative in 1976. By far the largest component in the real earnings decline experienced by these men between 1966 and 1976 was associated with the increase in age-related experience.