Age Discrimination in Earnings in a Dual-Economy Market

Age discrimination in earnings has been difficult to establish because of the confounding effects of human capital variables that deteriorate as workers grow older. To assess the extent to which declining earnings result from discrimination, this study examines the age-earnings relationship for a panel of older workers in 1966 and 1976, simultaneously controlling for human capital variables and other variables related to both age and earnings. In addition, following literature that suggests that the economic sector in which employed influences this relationship, interactions by core/periphery sector are examined. Age-based discrimination is found for core sector workers, and as expected, becomes more prevalent as the workers grow older. These findings are discussed in light of claims that older workers, especially in the core sector, have lost power in the work place.