Labour Markets

Job Mobility Declines with Age but Can Boost Wages and Employment Prospects

Job mobility, defined as the process of changing jobs or careers within or across companies, is essential for a dynamic and healthy labor market. However, this tendency to change jobs is not uniformly distributed across all age groups. Younger workers often switch jobs, which helps them advance their careers and increase their earnings. However, older workers tend to change jobs less frequently, a trend highlighted in the OECD’s “Promoting Better Career Choices for Longer Working Lives” report.

This trend of reduced mobility among older workers is drawing increased attention due to its implications for labor markets. As of 2022, individuals aged 45 to 64 constitute 41% of the OECD workforce, up from 29% in 1990. The OECD’s research indicates that older workers who do transition to new roles often reap significant rewards, including higher wage growth and a higher likelihood of being employed at old-age.

Job mobility over the working-life

Within OECD countries, the job mobility rates show a marked decline with age: 17% of workers under 30 change jobs annually, compared to just 5% among those aged 55 to 64. This declining trend underscores a shift in workers’ willingness or ability to seek new employment opportunities as they age.

The OECD report sheds light on several key factors contributing to this trend. Improvements in job match quality over time mean that as workers age, they are more likely to find a job that aligns with their skills, qualifications, and preferences. This better match is often accompanied by increased job satisfaction, competitive pay, and benefits, reducing the incentive to switch jobs.

Mobility impact wages, but how depends on nature of change

The OECD’s analysis reveals that voluntary job transitions tend to increase wages across all age groups, with the most substantial wage growth observed in younger workers. For instance, workers aged 25-34 who voluntarily change jobs see a wage growth of 16.1%, whereas for those aged 55-64, the increase stands at 3.5%.

Involuntary job changes, such as layoffs, paint a different picture, often resulting in significant wage reductions, especially for older workers.

Job change can improve the lenght of working-life

Furthermore, the OECD findings suggest an important correlation between mid-career, job changes and the likelihood of continued employment into later life. Workers who transition between the ages of 45 and 54 are more likely to remain employed at 60 and less likely to become inactive compared to their counterparts who do not make such changes.

Policies to enhance job mobility for older workers

As countries adapt to a green economy and further digitalisation and increasing life expectancy, job mobility will be important in ensuring well-functioning labour markets. However, despite its benefits the OECD also point out several barriers that needs to be overcome to increase job mobility for older workers, including age discrimination, skill gaps, and the costs associated with geographic mobility.

The OECD also points out that career advice and job shadowing can be beneficial in encouraging older workers in job search. Promoting mechanisms for within-firm mobility is also crucial, with the OECD recommending “mid-career reviews can encourage older workers and their managers to identify mobility and training pathways that can improve older workers’ retention and satisfaction within the company.”

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