Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103492
Authors: 
Deelen, Anja
Euwals, Rob
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8467
Abstract: 
In this study, we investigate the anatomy of older workers' wages. The central question is whether the wage cushion – i.e., the difference between actual wages and collectively agreed-upon (maximum) contractual wages – contributes to the fact that wages continue increasing at older ages. We follow the wages of individual workers in twenty-two sectors of industry in the Netherlands using administrative data for the period 2006–2010. In the public sector, we find no evidence of a wage cushion. Wage scale ceilings set in collective agreements are guiding for older workers' wages, and workers earning a contractual wage equal to a wage scale ceiling are not compensated with higher additional wages. In the private sector, we do find evidence of a wage cushion. Wage scale ceilings are less restrictive and workers earning a contractual wage exceeding the highest wage scale ceiling experience higher contractual wage growth. The private sector wage cushion enhances wage differentiation and allows for wages that continue increasing at older ages.
Subjects: 
wages
economics of the elderly
JEL: 
C23
J14
J31
Document Type: 
Working Paper

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