Behavioral biases in the labor market, differences between older and younger individuals

The employed and unemployed who are considering giving up work or seeking employment, respectively, have to consider the pecuniary and non-pecuniary benefits of both positions. What is the minimal allowance that motivates an individual to move from employment to unemployment? What is the minimal salary that motivates an unemployed individual to seek employment? This study examines those questions, specifically with regard to the differences between older and younger individuals. Our findings demonstrate that age has a strong impact on the threshold incomes and behavioral factors. Older people demand more money than younger people for giving up their jobs. Older workers also have a stronger status-quo bias and demonstrate a greater preference for work. However, there is no significant difference between young and old with respect to the income needed to motivate a switch from unemployment to employment.