Economic Benefits of Employing Older Workers

This policy paper utilizes data collected by the Israel Central Bureau of Statistics (CBS), as well as international data, to examine the economic implications of employing older workers in Israel, and the consequences of (lack of) employment on the healthy aging of the population, both for individuals and for the economy as a whole. A review of international research shows that different employment statuses (employment, unemployment, retirement) affect the individual as well as the wider economy. In order to assess the economic value of employing older workers, we analyzed outcomes such as an increase in GDP, a decrease in healthcare costs, a rise in pension savings, and reduced transfer payments. Further analyses gauged the impact of changing taxation incentives on the labor supply of older workers and their economic contribution. In light of this effect, our first and foremost recommendation is to reduce the tax on work at older ages, in order to make retirement less financially attractive than it is today, making it more worthwhile to remain in the labor market for those who choose to do so.