Did the Intergenerational Solidarity Pact increase the employment rate of the elderly in Belgium? A macro-econometric evaluation

In December 2005, the Belgian government adopted the law on the Intergenerational Solidarity Pact (ISP) with the objective to increase the employment rate of the elderly. In order to meet that objective, several active ageing policies and reforms were taken. The aim of this paper is to investigate the overall effectiveness of the ISP in rising the elderly employment rate by gender. Two methods are used. Both rely on a macro-econometric model which explains the evolution of the elderly employment rate by the economic conditions. The first method uses forecasts of the macro-econometric model as an indicator of the value the employment rate would have taken in the absence of the policies. The second method tests for the presence of structural breaks after the introduction of the main policies of the ISP. The results of the first method suggest a positive impact of the policies on elderly employment rate which is slightly larger for men, and a negative impact on younger men's employment rate, suggesting a substitution effect. These effects are however too small to be statistically significant. Using the second method, no structural break is found.